What Could Make a Debt ‘Good’ or ‘Bad’?

Although some people might argue that having any type of debt is bad and should be avoided, the reality is that credit is a tool and there are times when borrowing does make sense – usually this is when debt is taken on with the expectation of a significant future benefit, a way of investing for the long run. Here are a few common examples of when using credit might be considered helpful ‘good’ debt:

• Buying a Home: Since housing is a necessity and you are investing and building equity in a property that would be expected to increase in value over time, taking out a mortgage is often considered useful debt.
• Paying for Education Costs: Student loans to fund education that establishes or boosts your career is another type of potentially beneficial borrowing if you expect to get returns with increased future earnings.
• Starting Your Own Business: A loan to launch or expand your business can be a useful tool in pursuing profitable growth.

‘Bad’ debt isn’t necessarily bad, but this term usually refers to credit used either for fast consumption or for spending that provides only a brief benefit. Here are a few examples of this type of short-term benefit debt:

• Vehicle Financing: It’s difficult for most people to purchase a reliable vehicle outright, and taking advantage of credit isn’t always a bad thing, but borrowing to buy a car can have downsides:
• Vehicle values begin to depreciate immediately after purchase, so you often owe more than what the vehicle is worth for some time – especially if you don’t make a significant down payment when you buy.
• Car payments can take up a sizable amount of your household budget, and financing terms can regularly extend to over six years.
  • Be careful financing a vehicle with a co-signer. Many people fail to realize the full commitment of joint vehicle financing because the other party plans to be the primary insurer and driver.
• Consumables Bought on Credit: With high interest rates (especially on store cards), charging your credit cards for household goods and purchases you don’t have the cash for is seldom a good use of credit. These goods hardly ever have enduring value and if you don’t pay off your balance in full right away, the true cost climbs very quickly.

Ways to Deal with Credit Card Debt

Consider Your Personal Finances and Circumstances

Your personal situation and specific circumstances are also a key factor when evaluating your debt load or potential future debts. Consider the following:

Can you consistently afford the payments required to repay the debt on time, and in full? Even a useful debt can end up a ‘bad’ debt if you can’t afford the payments.

• Take a mortgage for example: This can be a huge problem if you borrow too much or experience an increased interest rate such that your regular monthly payment becomes unaffordable.
• Student loans can later be a problem if you borrowed heavily but don’t get the expected increase in earnings.
  • Always be careful not to borrow more than you need and take time to carefully research the career ladder realities of courses of study you are considering.

Why are you borrowing, and what emotions are you experiencing in relation?

• Always consider your needs VS wants and don’t emotionally justify your spending.
  • Are you using credit for a true ‘must-have’, or could this be a ‘want-to-have’ that you’re feeling emotionally caught up in?
• Avoid impulse purchases, especially if you are borrowing to acquire them.
• It can be difficult to get into a new habit of scrutinizing purchases you’re considering – don’t be pressured or swayed by advertising, whether sales or credit offers.

What’s the Best Way to Consolidate my Debt?

Pros and Cons of Using Credit – and Tips for Using Credit Well

No matter what debt you are taking on there can be pros and cons, many of which will be strongly influenced by how you use your credit. Some pros of credit may be:

• Not needing to wait to save up cash needed for major goals (like education or buying a home)
• Earning perks and rewards on day-to-day purchases you were going to make anyways
• Building a positive credit history that can help with future borrowing at ‘best rates’

Having credit as a resource to help with unexpected expenses may be a ‘pro’ but understand this can quickly turn into a ‘con’ if you struggle to pay the debt off – especially since the impacts of an emergency can disrupt your finances for some time. Other common cons to credit may include:

• It costs money to borrow because you pay interest. For example: Credit card interest increases the true cost of purchases if you don’t pay the charge off in full right away.
• Debt repayment takes money away from yourself now and in future, leaving you less for other needs and goals.

Good Habits for Using Your Credit

It’s a good idea to hit pause and take time to get grounded before moving forward with purchases made on credit. Detach from the excitement and feel-good rush of buying; check in with the realities of your budget and financial goals. Realizing that new debt repayment will set your finances back in other areas can be sobering. Using credit to your best advantage, you might also consider habits such as:

• Keeping borrowing limits low to avoid the temptation of using more than you need (or can afford).
• Not using credit for transactions that don’t have an interest-free grace period, such as cash advances or lottery ticket purchases.
• Always paying more than the minimum monthly payments required on your credit cards.

It’s also essential to ensure your budget is well-balanced and that you have a solid plan for paying off your debt. Without either of these you’re likely to struggle with virtually any type of debt, even the ‘good’ ones.

7 Signs You Should Deal with Your Personal Debt – Now

Where Can I Get Help With my Debt, or Advice on my Debt Situation?

Licensed Insolvency Trustees are the professionals in Canada who are fully government-qualified, empowered and endorsed to help people with debt. We can assist people with many different debt needs and circumstances, including (but not limited to):

• General information on all your formal and informal options to deal with debt
• Addressing urgent situations or creditor conflict (i.e. Wage garnishment, legal action, etc.)
• How you can restructure or consolidate debt to make payments lower
• You’re interested in some form of debt forgiveness or debt relief

Sands & Associates’ Licensed Insolvency Trustees work with people across BC, and we offer our services in-person from local offices throughout the province, as well as online or over the phone, so you don’t even have to leave the comfort of home to get support.

There is no cost to get confidential debt advice and insights about your situation; we believe everyone should have confidence in their personal financial planning and how they are managing their money.

Preparing for Your First Meeting with Sands & Associates? Learn More

You Owe it to Yourself to Get Debt Help

A lot of people who are struggling to manage their debt feel guilty about the debts they accumulated, and often have a lot of embarrassment and shame around being unable to pay them off.

The idea of discussing your situation with someone who is essentially a stranger, professional or not, can be uncomfortable – and taking the first step of reaching out for help is often the hardest part.

Having a debt problem does not make you a bad person. Financial challenges are not a reflection of your self worth. You deserve to live with dignity and without overwhelming stress.

You do not have to struggle alone with your debt. We understand that despite your best efforts and intentions it is not always possible to repay your debts as planned, and there are options to help you deal with your debt in a way that is manageable and affordable so you can move forward with your life.

Connect confidentially with a friendly local expert – your debt-free future could be closer than you think! Book your free, non-judgmental consultation with Sands & Associates today and get a debt-free plan that’s right for you.

The post What’s the Difference Between Good Debt and Bad Debt? appeared first on Sands & Associates.

Many people are surprised to learn that you can work with a Licensed Insolvency Trustee to declare bankruptcy or file a Consumer Proposal that can include government-related debts. This is due to the specialized qualifications and regulation of Licensed Insolvency Trustees, giving them the ability to help you access solutions available under Canada’s Bankruptcy and Insolvency Act.

Read on to learn more about common government debts that can be forgiven using these debt resolution methods:

Tax Debt

If you are facing Canada Revenue Agency (“CRA”) tax debt it’s important to understand that interest and penalties can compound very quickly, making even a small initial balance difficult to pay off – CRA is also a powerful creditor who can begin aggressive garnishments, which could include wage and asset seizures, virtually overnight. Furthermore, unlike many other types of debts, these government debts are not confined by BC’s Statute of Limitations, meaning that they do not expire and you cannot “wait them out”.

Outstanding debts you have with CRA can be included in a personal bankruptcy or consolidated in a Consumer Proposal. This includes balances due for personal income taxes, GST or PST, as well as corresponding interest and penalties. All accruing interest is halted, as are wage garnishments or bank account seizures that may already be in place.

A Consumer Proposal or personal bankruptcy can both effectively stop the priority nature of CRA debts and collections, reducing them to the same importance as common consumer debts such as an unpaid credit card.

Other than filing bankruptcy, making a Consumer Proposal is the only method that can be used to negotiate a reduced balance owing with CRA:

• Declaring bankruptcy can permanently write-off CRA tax debt.
• Filing a Consumer Proposal can consolidate and reduce your CRA tax debt down to what you can afford to repay, with the remaining balance being forgiven.

Learn More About Managing Tax Debts in a Consumer Proposal or Bankruptcy

Medical Services Plan (MSP) Debt

BC MSP premiums were eliminated January 1, 2020 however, if you were required to pay MSP premiums and still have an unpaid balance, this remains payable and collection actions on overdue accounts may still be taken.

MSP premiums were based on your previous years’ income tax returns. If you were behind in tax filings this may have resulted in you being ineligible for premium assistance and charged the full premium amounts. MSP’s Retroactive Premium Assistance provides adjustments for previous premiums and may be available to help reduce your balance.

Regardless of premium assistance standings, both your outstanding MSP balance and any compounding monthly interest charges can be eliminated and written-off through filing a bankruptcy or Consumer Proposal in BC.

Connect with a Licensed Insolvency Trustee from anywhere in BC without leaving the comfort and privacy of your home – book your confidential free debt consultation today.

Employment Insurance (EI) Debt

An overpayment of Employment Insurance benefits can occur from a few different causes such as application and reporting errors, or decisions made regarding insurability. The Canada Revenue Agency provides collection services for money owed for EI overpayments and if you are unable to repay the balance you may be subject to the same consequences that CRA takes for collecting tax debts.

Income garnishments as well as asset liens and seizures by CRA can occur if an EI overpayment is not repaid. You could also expect to have any tax refunds or personal GST credits you were otherwise anticipating be withheld by the CRA and applied to your balance owing.

Social Assistance Overpayment Debts

Provincially governed, social assistance overpayment debts are generally forgiven under a bankruptcy or Consumer Proposal.

Does Including Government Debts in a Bankruptcy or Consumer Proposal Mean I Can’t Access Future Benefits?

It is important to understand that even if you declare bankruptcy or make a Consumer Proposal to eliminate government debt, you will not be prevented from receiving future government benefits.

Your eligibility for EI benefits, emergency benefits, housing benefits, pensions and more will not be impacted by a prior government debt being included in or written-off as part of your bankruptcy or Consumer Proposal.

Learn About Debt Forgiveness with Personal Bankruptcy: Step-by-Step

Student Loans

Whether your student loans are private, provincial or federal, these debts and related interest charges can also be part of the debts included in a personal bankruptcy or Consumer Proposal filed in BC. Two key considerations that determine how your student loans are ultimately resolved depend on the date your studies ended, as well as the type of student loans you have.

• If more than seven years have passed since your last study date, you can be released from your government student loans using a bankruptcy or Consumer Proposal.
• In the event you have not been out of school for seven years you would get relief from making payments on government student loans during the period that your bankruptcy or Consumer Proposal is active. Once your bankruptcy or Consumer Proposal is finished you would then begin repaying these surviving debt balances (less any amounts received through your Consumer Proposal) and any accumulated interest.
  • Some people choose to continue making payments on their surviving student loans even while their bankruptcy or Consumer Proposal is in progress. This is your option.
• If only five years have passed since you last attended school, it may be possible for you to apply under a hardship provision to BC court to have your government student loans discharged like the other debts included in your bankruptcy or Consumer Proposal.
  • Under this provision your student loans may be released where you can satisfy the court that you acted in good faith in your obligation to repay your student loans, and you have experienced, and will continue to experience, financial difficulties that would prevent you from repaying these debts.
• Privately (bank) held student loans and other student financing debts will be treated as any other type of general consumer debt (such as a credit card) and can be eliminated in both a bankruptcy or Consumer Proposal.

In situations where your recent government student loans only form part of your overall debts, declaring bankruptcy or making a Consumer Proposal can still be beneficial debt options since all your other debts (tax debt, credit cards, overdrafts, etc.) may be wiped out, making the surviving student loans much more manageable.

Read More Tips for Repaying and Discharging Student Loans

ICBC Debt 

ICBC debts may be categorized in a number of different ways such as: claims, “motor vehicle indebtedness” including outstanding AutoPlan insurance payments or unpaid Driver Penalty Point Premiums, Driver Risk Premiums, unpaid fines for offences, or motor vehicle related offences under the Criminal Code such as unpaid speeding tickets.

A Licensed Insolvency Trustee can help you investigate the type of ICBC debt you have and how each may be dealt with if you decide to make a Consumer Proposal or file bankruptcy – both of these options can result in ICBC debt forgiveness or having the overall balance cut.

Most ICBC debts will be forgiven under a Consumer Proposal or bankruptcy – even in a motor vehicle accident where you are found to be at fault and ICBC pays a settlement to another party, you may still be able to get relief from the resulting debt.

There could be portions of your overall balance owing to ICBC that fall into categories of debts that can survive these processes; if your Licensed Insolvency Trustee suspects this may be the case they will (with your permission) communicate with ICBC directly to clarify how a debt is categorized and determine any portion that might survive before you commence your debt relief process.

Temporary restrictions may be placed by ICBC, such as:

• Temporary denial of license, insurance renewal or subsequent license plates:
  • During the period of your bankruptcy prior to your discharge ICBC may retain their right to prevent you from licensing or insurance (generally renewals). Some of the criteria by which ICBC may review your individual circumstances includes:
    • The circumstances under which the debt arose.
    • Whether your ICBC debt was a significant portion of your overall debt load.
    • Hardships that may result from the refusal of these renewals.
    • The impact of a refusal on your employment, education, or ability to obtain medical treatment.
      • In situations where your employment is dependent on you holding a driver’s license, your employer may be able to write an official letter to ICBC stating such – this may result in a reversal of ICBC’s decision.
• Temporary denial of access to AutoPlan monthly insurance payments, resulting in you needing to renew insurance in prepaid 3, 6 or 12-month increments.

ICBC generally will not refuse licenses and insurance after your eligible debts have been discharged through your bankruptcy, or your filed Consumer Proposal has been accepted by your creditors.

Sands & Associates Licensed Insolvency Trustee Blair Mantin discusses dealing with Canada Revenue Agency debts on Global News.

Facing an unmanageable balance owing from the provincial or federal governments of Canada can be overwhelming and stressful. While some types of government debts are simple to resolve, others involve complex and ever-changing bodies of law – it is important to find out the facts and options for your situation as soon as possible. If you are struggling, the best course of action is to contact a Licensed Insolvency Trustee to get advice about how to manage government debts, as well as any other types of debts you may have. Licensed Insolvency Trustees are the only Canadian professionals legally able to provide debt solutions to work with all creditors on your behalf; consultations are always free, confidential – and at no obligation.

Stop debt-stress and get a plan to be debt-free today. Book your free confidential debt consultation to connect with a caring non-judgmental BC Licensed Insolvency Trustee.

_{This content is not intended to be specific legal advice; it is intended to be a simple guide in layman’s language to provide a basic overview only. E. Sands & Associates Inc accepts no responsibility for its use other than as intended. The law is an ever-changing body of statutes and decisions, and the reader is advised to seek counsel for specific matters relating to their situation.} 

The post Debt Solutions for Having Government Debts Forgiven appeared first on Sands & Associates.

As Licensed Insolvency Trustees we often help individuals in BC who have either recently finished school and are looking for advice on how to manage student debt, as well as individuals who have been struggling to deal with student loans for some time. Read on for general tips to help you pay off your student debts, as well as an overview of legal options for Canadians to consolidate and write-off student loans and other debts.

Tips for Repaying Student Debt

If you’ve recently finished your post-secondary studies or are preparing to start a post-secondary area of study, consider these strategies to help you manage your student debt repayments, now and later:

• Make a budget. Before committing to student loans (or any other type of debt), map out how much money you’ll really need.
  • Factor in tuition, books, rent, groceries and any other costs of living.
  • Consider whether you can earn some of these funds through a part-time or summer job and have a back-up plan for emergencies or a deficit in what student loans may extend to you.
  • If you’re granted more than you think you need, don’t be tempted to spend it all – avoid taking on more debt than necessary!
• Use all the resources available to you. Extra resources can add up to great savings later, so be sure to explore all the potential benefits and sources of assistance.
  • Do you have an RESP?
  • Are there grants, scholarships or bursaries you can apply for?
  • Will your parents be contributing to your education or costs (or housing you in general)?
• Build a post-grad plan. Know your loans, grace periods and payment due dates.
  • Keep in touch with your lenders if you move or your contact information changes.
  • Figure out a realistic plan to pay down your debts and avoid relying on more credit.
• Know when to ask for help – whether or not your payments are behind.
  • If your income is falling short of allowing you to make your student loan payments and you’re concerned your payments are going to fall behind, contact a student financial assistance office. The government has procedures in place that may be able to provide some student loan relief for you, such as reducing your monthly payment.
  • If you need more than temporary relief, connect with a Licensed Insolvency Trustee as soon as possible. They are the only debt help professional endorsed by the Canadian government to help you manage your debts – including student loans.

Legal Options to Deal with Student Loans in Canada

Contrary to what many people may believe, in BC (as well as the rest of Canada) there are two options that allow you to have student loans forgiven. Both solutions are only available by working with a Licensed Insolvency Trustee and can also be used to stop collection actions, including wage garnishments from Canada Revenue Agency collecting on student loans.

Consolidate Student Loans in a Consumer Proposal

A Consumer Proposal may be a suitable option for debt relief and a financial fresh start if you want to consolidate your student loans with other debts and have the financial ability to make some repayment towards the overall balance of your total debts.

Consumer Proposals are a unique type of legal debt consolidation that allow a person to consolidate virtually all their debts (such as student loans with credit card debt and other common debts) into one settlement offer, reducing the amount you need to repay, with the unpaid portion of your overall debt and accumulated interest being forgiven by your creditors.

• Most people will repay only a portion of their total debt, in full settlement – ranges of debt repayment of 30-70% of the total balance are common, with the remainder being forgiven or “written off” by the lender.
• Consumer Proposal offers are tailored to your specific situation and can last for as little as a few months, but cannot extend past 5 years.
• Consumer Proposals require no borrowing and there are no added interest charges or costs to be paid by you.

Compare Consolidation Options with our Debt Options Calculator

Discharge Student Loans in Bankruptcy

A personal bankruptcy can be used to discharge (write-off) student loans, as well as to get debt forgiveness from other common debts such as credit cards, overdrafts, lines of credit, payday loans and more. Not only is bankruptcy quite a private and unobtrusive process – for most people, personal bankruptcy in BC generally:

• Lasts for 9 months.
• Allows you to keep virtually all your assets.
• Costs as little as $2,700, paid through manageable monthly payments with a Licensed Insolvency Trustee.

Types of Student Loan Debt in Canada

In Canada there are 3 main types of student loans available:

• Federal student loans
• Provincial student loans
• Private student loans
  • In addition to bank-funded student loans, many major financial institutions will also offer specialized lines of credit and student credit card products.

Regardless of which type of student loan you have, a Licensed Insolvency Trustee can help you manage these student debts. Private (bank-funded) student loans will be treated as any other consumer debt (like a credit card), with no special exception. Government student loans may also be treated the same way, depending on when your studies ended.

Timing for Student Loan Debt Forgiveness in Canada

A key factor in dealing with government student loans is how long it has been since your studies ended:

• If it has been 7 years or more since you finished school, both a Consumer Proposal or a bankruptcy can eliminate in full your unpaid student loans, as well as accumulated interest.
• If it has been less than 7 years since you went to school and you are starting a Consumer Proposal or bankruptcy, you will still include your student loans in either process, but the unpaid amounts will ‘survive’ and need to be repaid after your Consumer Proposal or bankruptcy has been completed.
• If it has been more than 5 years but less than 7 since you last attended school and started bankruptcy or a Consumer Proposal, the court may grant an order that would discharge your otherwise remaining student loans under a special financial hardship clause.

Even if your Consumer Proposal or personal bankruptcy does not completely write-off your government student loans, dealing with other debts you have (such as credit cards, lines of credit, etc.) can greatly improve your budget and allow you to be in a better position to repay any surviving student loans.

A Licensed Insolvency Trustee will help you determine what amounts, if any, would survive your Consumer Proposal or bankruptcy before you commit to a process and will help you weigh the pros and cons of all debt options available to you. We believe that making informed decisions about available debt management strategies is key to our clients moving forward with success and from a position of confidence.

For more information on options for student and government debts, consumer debts and business debts, book your free debt consultation with a local Sands & Associates debt help professional today.

The post What to do When You Can’t Pay a Student Loan in Canada appeared first on Sands & Associates.

Debt help professionals across the country were already seeing increases in consumers needing debt help and are predicting that the current global situation will push even more Canadians towards financial hardship. If you are one of the thousands of people in BC being impacted financially, read on for some tips and insights to help navigate debt management during the COVID-19 crisis.

Blair Mantin shares financial tips to help navigate the COVID-19 crisis with CTV News:

1. Stay Informed and Aware
   • Current affairs across the country (and world) are changing daily – be sure to keep up to date with news about federal and provincial assistance measures that may impact you:
     • Federal announcements are updated here.
     • Provincial announcements are updated here.
   • Be on the lookout for scams – many Canadians are being targeted by scammers hoping to take advantage during this difficult time:
     • Always get your information from a reliable source such as official government websites.
     • Carefully review communications and offers before taking any action.
     • Be especially vigilant for phone-based scams – it’s easy and common for caller IDs to be impersonated by scammers.

2. Keep Calm and Carry On
   • Avoid panic-buying and selling.
     • Take a hard look at your budget and try to pare down non-essential expenses as much as possible to avoid overspending your available funds or relying on credit any more than you must in order to purchase day-to-day necessities.
     • Don’t be tempted to rush into selling assets or redeeming your RRSPs to pay off your debts – BC laws protect many of your assets from creditors in the event you are unable to pay your debts. The current crisis won’t last forever, and you will need those retirement funds down the road.
   • If you can’t make your debt payments and are concerned about the legal action your creditors may take, or are being pressured by collection agents, know that at this time courts across Canada are closed – meaning you cannot be sued right now.
   • Don’t put too much emphasis on your credit rating – credit scores can change dramatically in just a short amount of time and are a poor metric of overall “financial health”. Under normal circumstances there are many people who have great credit scores who are unable to obtain consolidation loans or other financing simply due to being overextended or not having enough assets to offer lenders as collateral.
     • Even consumers who get debt relief by filing bankruptcy move on and recover financially, getting new mortgages, vehicle loans, credit cards etc. often in as little as two years following the conclusion of the process.

Compare the Pros and Cons of 5 Debt Solutions

3. Take (the Right) Action
   • Communicate with any creditor to whom you are certain to miss payments. Don’t be afraid to ask for a deferral on your rent, mortgage, debt payments or otherwise even if your particular financial institution hasn’t made any public statement about their position – it doesn’t hurt to ask and find out what options you may have.
     • Only apply for the available financial relief you need and be sure you understand all terms and conditions before agreeing.
     • By deferring credit card payments, your mortgage, rent or otherwise – you are essentially adding to your overall balance – with interest. This does not mean the payment is forgiven forever, only that it is being postponed until the deferral period is over.
   • Change your bank account if you hold an account where you also owe a debt.
     • Many people are unaware that banks and other lenders have the “right of offset”, allowing them to recover money you owe them for an outstanding debt by seizing money you have in your account with them. The right of offset can also be applied to money you have in joint or business accounts, as well as accounts with an affiliated bank.
     • Your safest plan, and what we advise all our clients, is to never borrow from the same bank where you deposit your monthly income.
   • Be kind to yourself. We help people in all sorts of difficult situations that were unexpected; we know that money problems can happen to anyone at any time.
     • Don’t feel ashamed or beat yourself up that you “didn’t have savings” or “could have been better prepared” – whether divorce or separation, health issues or job-loss, there are many unanticipated “everyday circumstances” that lead people to seek debt help.

4. Reach Out for Help
   • Be sure to stay connected with family and friends even when social distancing. You are not alone, and a virtual visit can go a long way in keeping our spirits up during these challenging times.
     • Access online and telephone resources for mental health if you need additional support managing stress and anxiety, and make time for self-care in your daily routine.
   • When it comes to understanding your rights if you can’t pay your debts, how to deal with bill collections or options for debt forgiveness, connect with a Licensed Insolvency Trustee for a free and confidential debt consultation – right from the comfort and privacy of your home.
     • You may have several methods to get debt relief – some of which you may only need knowledge of to implement, such as:
       • “Communication in writing only” notices for collection agencies
       • BC’s statute of limitations on debt
       • BC’s “seize or sue” provisions
     • Licensed Insolvency Trustees are the only professional endorsed and authorized by the Canadian government to assist you with debt solutions.
       • Some of the solutions we offer can allow you to consolidate virtually all your debts (even government debts like taxes and student loans) without interest and additional fees, or have debts fully forgiven – while ensuring you are protected from your creditors.

You are not alone – we are here to help you.

Get debt help and advice from the comfort of your own home – book your free debt consultation via telephone or video conference and connect with Sands & Associates’ non-judgmental knowledgeable debt help professionals. We have a large network of local offices and are proud to serve BC residents residing anywhere in the province.

The post Debt Management Tips to Help Navigate the COVID-19 Crisis appeared first on Sands & Associates.

If you are struggling with debt, know that you are not alone – there are solutions and professionals that can help you get out of debt.

Since 1990 Sands & Associates has helped people break free from the stress of debt, to move forward with their lives and goals. We are proud to support people as they take charge of their financial challenges, and are grateful for those who have shared their stories of overcoming those same obstacles, in the hope that they may inspire someone facing a similar situation to take action.

Meet Jessica and watch her tell her debt-free success story, unscripted and in her own words.

Read more about Jessica’s story:

Jessica’s introduction to credit began at the age of 18, starting with her very first credit card offer. When she was extended even more credit in addition to her student loan, a personal loan and daily costs of living, her debt began to get out of control.

“I took it, thinking it would be a good thing, thinking I could build my credit…

Initially she considered debt a normalcy of life, especially for a young adult, but she eventually became caught in a worrying and nagging pattern. “I would make a couple of decent payments on a credit card and something would come up (like the brakes on my car would go), or just something unexpected and everything would go downhill again.”

“I went to school, I got a job…and I had a career, so I didn’t see what was really wrong. I think I’m doing everything properly, but my debt was just outweighing all of it.”

Determined to persevere, Jessica often worked every day of the week, most days at two different jobs, just to make her minimum payments. “I would wake up in the middle of the night thinking about my bills, thinking about how much am I gonna get paid…if there was another job I could pick up to make ends meet.” Her debts had become all-consuming, causing her to lose sleep and embarrassment about her finances led to her avoiding contact with other people, or even opening her mail.

“I just kept thinking I would get on top of it when I got my tax return, or I got a raise at work or when I started picking up extra shifts.”

Like many people, Jessica struggled to manage her debts on her own for years before making the decision to reach out for help. “…I wasn’t sure I could pay my rent…I wasn’t sure if my car payments would bounce, so that’s when I started looking for help. It took me three years to actually pull the trigger and make the call… I decided I need to do something now or I will be stuck forever.”

Learn about 3 Types of Debt Consolidation in Canada

Finding out that there was help, she met with Sands & Associates, leaving the office with a plan of action that gave her a sense of comfort and relief: “I felt like everything was going to change for me for the better and I could finally just relax and trust that I was in good hands.” She credits now having the right tools and resources for giving her a plan for the future.

“…someone with 53 thousand debt could actually have a light at the end of the tunnel…to pay it all off in 5 years, when I thought it would take me until I was maybe 65… I feel like a million bucks.”

Connect with a caring Sands & Associates debt expert – book your free debt consultation today.

How Can Debt Counselling Help Me?

Many people are surprised to learn that there are legal solutions and debt counselling options in addition to bankruptcy that can help to settle and write-off debt. When you work with a Licensed Insolvency Trustee to make a Consumer Proposal to consolidate your debt (or to file a personal bankruptcy), you’ll have support from a trained non-judgmental debt advisor throughout the process. Some of the benefits you may gain from these debt counselling processes include:

• A free assessment of and advice about your debts and options you can pursue to better manage them from a qualified debt expert;
• Settling virtually all types of debts, from credit cards to student loans to tax debt and more;
• Relief from interest charges and unmanageable monthly payments with a debt settlement plan tailored to your specific situation;
• Protecting your assets that may otherwise be at risk from creditors pursuing legal action;
• A representative that will step into your shoes and handle inquiries from your creditors and stop collection calls, texts and letters;
• Financial counselling sessions with a caring qualified professional that will give you tools and techniques for credit use and ratings, budgeting, savings and goal setting;
• The opportunity to become debt-free and gain a financial fresh start.

Consumer Proposals are the number one alternative to personal bankruptcy in Canada. Meet with a Licensed Insolvency Trustee to learn more about whether a Consumer Proposal could be your best debt solution.

Ready to get started? Your debt-free future is waiting. Book your free debt consultation now.

The post Meet Jessica, Hear her Debt-Free Success Story appeared first on Sands & Associates.

BC’s Provincial Government recently announced that it would eliminate interest charges on BC student loans, over-awards, risk-sharing and guaranteed loans effective February 19, 2019. This change benefits current borrowers in repayment, as well as future recipients of BC student loans.

The 2019 BC Budget suggests that the average graduate will save $2,300 in interest over a 10-year repayment period, based on combined federal and provincial student loans totalling $28,000, while Federal Budget 2019’s proposed interest rate cuts and grace period (six months) before interest begins to accrue are estimated to save student loan borrowers around $2,000.

$4,300 average savings on interest / 120 months (ten years) = $35.83 per month actual impact

While the savings in provincial and federal student loan interest are a welcome benefit, broken down on a monthly basis they may be negligible for many students who often struggle with low earnings after graduation.

Due to costs of living and the province’s continued housing crisis, students may still find themselves facing a mass of debt accumulated during their post-secondary studies. Furthermore, parents funding education may continue to feel the financial pressures of supporting their dependents.

The 2018 BC Consumer Debt Study conducted by Sands & Associates found that 4.7% of respondents polled claimed that the primary cause of their debt was student loans or student lines of credit.

The student debt crisis isn’t exclusive to BC, Ontario-based Licensed Insolvency Trustee firm Hoyes Michalos also provides significant findings around the prevalence of student debt among insolvent Canadians. The 2018 Bankruptcy Study discovered that the fastest growing cohort filing bankruptcy were millennials, with more than three in ten carrying student debt.

Sands & Associates proprietary research: 22% of students polled said they use credit cards for the majority of their daily purchases. ¹

How much do students expect to earn five years after graduation?

Nearly three-quarters of all students surveyed (73%) anticipated they would be earning a salary greater than $50,000. ¹

Reality

• $27,500 – Median employment income of British Columbian (not in census families) in 2016 ²
• $68,690 – Median employment income of British Columbian families in 2016 ²

^{1 Source: 2013 BC Student Finances Study
2 Source: Statistics Canada}

Too Little Too Late?

Mantin notes that it’s not uncommon for his firm to provide debt help to people who have been out of school for over a decade who are still carrying big student loans; sometimes even related to degrees they are unable to use for their current profession, or worse still, individuals who have found themselves unable to work at all due to health problems.

Student Debt Help

Contrary to what many believe, Canadians who find themselves no longer able to repay their debt do have options to negotiate and write off student loans besides the debt repayment programs offered through the lenders themselves. The Federal Government provides exclusive legal standing to Licensed Insolvency Trustees to offer debt help solutions that can restructure and even eliminate an individual’s student (and other) debts entirely.

• Privately held (bank) student loans will be cleared through a Consumer Proposal or bankruptcy, like any other type of basic unsecured debt.

Provincial and/or Federal student loans and interest may be managed by filing either:

A Consumer Proposal: This legal debt consolidation works to effectively combine and reduce virtually all consumer debts, even student loans and other debts owing to the Government. Debts may be reduced by up to 70-80% or more, with no interest.

A Personal Bankruptcy: Where a person is no longer able to make meaningful partial repayments on their debts, a personal bankruptcy filing will result in forgiveness of essentially all debts.

Timing is important to note with government student loans in these options:

• If it has been seven years or more since you were last a student, your government student loans and interest will be fully settled upon completion of your Consumer Proposal or bankruptcy.
• If it has been less than seven years since you were last a student, your unpaid government student loan and interest balances will need to be repaid following your Consumer Proposal or bankruptcy.
  • You may however be granted relief from making payments while either option is in progress, although interest will accrue.
  • Amounts your creditors receive through your proposal or bankruptcy go towards reducing the surviving balance.
• If you were a student five or more, but less than seven years ago, you can file a court application to have the student loans released (forgiven) under a special hardship clause.

Compare options to eliminate debt using our Free Online Debt Options Calculator

For those who have been to school within the last seven years, or would not qualify for the special discharge order, a Consumer Proposal or personal bankruptcy may still be advantageous options to consider. Many people find that once their other consumer debts (such as credit cards, lines of credit etc.) are eliminated, they are then in a better position to pay off their remaining student loans.

Learn more about legal debt solutions that can consolidate, reduce and write-off student and consumer debt. Book your confidential free debt consultation today!

The post Cutting Interest on Student Loans – Is It Enough? appeared first on Sands & Associates.

Sands & Associates Vice-President and Vancouver Licensed Insolvency Trustee Blair Mantin joined Breakfast Television Vancouver to help viewers understand some key differences when it comes to debt-types, and what BC consumers can do if they find themselves in need of debt help.

Watch the Breakfast Television Vancouver clip here, and read more below:

Debt-Types: The good, the bad – and the ugly!

“Good Debt”: Debt that is undertaken with the expectation of a future benefit.

Mortgages
Generally a mortgage would be considered “good beneficial debt” as it’s almost a kind of savings plan:

• Housing is a basic necessity, and with a mortgage (instead of paying rent) the idea is that you’re progressively building equity in your home that will appreciate over time.

Caution: Your mortgage can “turn bad” if you overextend a home equity line of credit, or take on too much mortgage with an interest rate that increases as rates rise.

Student Loans
Taking on a student loan means you’re investing in yourself and your future earning potential:

• Generally government student loans have manageable repayment terms, which, if you’re able to maintain required payments, can keep a student loan on the “good side”.

Caution: It’s easy to take on more student debt than you need. Carefully consider before financially investing in specific programs, and be realistic about your ability to earn an income with the credentials you’ll acquire.

“Bad Debt”: Use caution when taking on – the money (credit) and its benefits may be long gone, but the repayment is still lingering.

Credit Card Balances
Credit card debt can accumulate slowly over time, often as a result of regularly overspending or simply not having enough paycheque to meet your living expenses.

• Making only minimum payments (or just slightly more than that) each month means that even a relatively small amount of debt can take years to pay back.

Caution: With an interest rate of 24% (a mid-level rate for most bank and department store cards) your debt will double every 3 years! A $6,000 debt could take 40 years or more to pay off with only the minimum payments being made each month.

Long Vehicle Finance Terms
The opposite of your mortgage, financing a vehicle means investing in an asset that depreciates – rapidly!

• Taking advantage of financing to get a car isn’t a bad thing, but finance terms are now longer than ever, and tying yourself to a 7 or even 8 year financing term isn’t uncommon.
• Car payments can take up money that would be beneficial towards paying off high interest debt, building savings, or retirement planning.

Caution: Avoid making an unaffordable vehicle “affordable” by stretching out the payments over a longer term. Think carefully before signing on for long-term vehicle payments.

“Ugly Debt”: Debts brought on as a last resort and/or debt that can have a severe impact if it’s not immediately paid.

Payday Loans
The borrowing fees and interest rates of payday loans are extremely high, which often starts a cycle of borrowing that is difficult to break. This type of “last resort financing” can also lead to a person having multiple payday loans outstanding at a time.

Caution: Take a close look at why you’re using a payday loan company before making any commitments. If the problem is becoming a habit, then it may be time to speak to a professional debt advisor to get help breaking the cycle.

Government Debts
Whether you owe money for taxes, GST or payroll remittances, or even outstanding medical service premiums, the government is one creditor you don’t want to have.

• The government has powers of collection action and even wage seizure that most other creditors do not.
• If you’re unable to pay the debt or collection has escalated speak with a Licensed Insolvency Trustee as soon as possible, they can help you.

Caution: Avoiding filing an income tax return as a way to keep your outstanding balance from growing is generally a bad idea. Canada Revenue Agency will often issue “arbitrary assessments” with huge balances due as a way to prompt a non-filer into complying and paying.

5 Signs Your Debt Has Become a Problem

1. You’re only able to make slightly more than, or not even the minimum monthly payments towards your credit card debt each month.
2. Debt payments are taking up a significant amount of your monthly income.
3. You have considered or been turned down for a traditional debt consolidation loan.
4. Worry, anxiety or fear about money and your debts is becoming a regular occurrence and it is impacting you or your family.
5. You’re trying to ignore your debt. Creditors may be threatening to, or have already begun collection calls or other measures.

Filing a Consumer Proposal or personal bankruptcy with the help of a Licensed Insolvency Trustee can allow you to consolidate virtually all consumer and government debt, and cut how much you have to repay.

Meet with a local debt help expert from Sands & Associates to learn about the legal options you have to become debt-free. Book your confidential free debt consultation now.

The post Not All is Created Equal When it Comes to Debt – Breakfast Television Vancouver appeared first on Sands & Associates.

Watch the clip below, and read on for more!

Why a Focus on Financial Literacy Month?

In 2014, Sands & Associates surveyed around 900 people to find out how many could correctly answer a series of questions relating to debt and debt management options:

• While nearly 60% of survey participants felt they had a good or excellent grasp of financial skills and concepts, only 3% correctly answered all questions asked.
• Of that 3%, all had previously filed a Personal Bankruptcy or Consumer Proposal!

Every year tens of thousands of Canadians are unexpectedly faced with a difficult debt management situation.  If you were faced with a financial crisis due to your debts, would you know all your legal rights, options and remedies?

True or False?

1 – There’s no way to ‘make a deal’ with the government if you owe them money.

• False! The reality:
  • Owing the government money can be incredibly stressful – whether it’s income taxes, student loans, unpaid GST or other amounts owing, Canada Revenue Agency has more powers of collection than any other party.
  • A personal bankruptcy or Consumer Proposal are the only methods of ‘making a deal’ with the government to repay only a portion of the debt owed.
  • Taxes, student loans, even ICBC debts can be forgiven via personal bankruptcy or Consumer Proposal.

2 – Spouses are automatically responsible for each others’ debts.

• Think you’re marrying your partner’s debt? Think again!
• Many people assume that debt automatically becomes joint once you are married or cohabitate for an extended period. This can lead to situations where couples make poor financial decisions because they are unaware that one partner’s assets do not need to be used to pay the other partner’s debts.
• The reality:
  • Unless a spouse has explicitly signed to be responsible for his/her partner’s debts, there is no right simply by way of marriage or cohabitation for a creditor to try to collect from the spouse who does not owe this money.
  • This applies to all debts – student loans, taxes, credit cards, bank loans – unless you are the person who actually owes the money, you can’t “marry yourself into the liability”.

3 – You lose everything if you’re bankrupt.

• This is absolutely a myth!…but a common one. (Almost 55% of people we surveyed believed this to be true.)
• The reality:
  • Most people keep all of their assets.
  • BC law sets out a minimum level of assets each person is entitled to retain if they file a personal bankruptcy. This includes household furniture, tools of the trade, clothing, even RRSPs!
  • Most people keep their house and car during a bankruptcy, as long as they are able to keep up on the monthly mortgage/car loan payments.

4 – If you file a personal bankruptcy, you’ll never get credit again.

• False!
• The reality:
  • For someone who has never been bankrupt before, a bankruptcy will purge from their credit report 6 years after completion of their bankruptcy.
  • Although many people believe they can’t get credit for 7 years, this is untrue! It is common for credit to be sufficiently re-established for new credit within 2-3 years of filing personal bankruptcy.

5 – A credit rating is a good measure of your financial health.

• A credit score is absolutely not a reliable measure of financial health – good or bad!
• Why?/The reality:
  • A credit score is essentially just a number used by lenders to assess your profitability to them– based on various transactional information contained in your credit report.
  • Credit ratings/scores are not permanent – and they can change dramatically in a short amount of time.
  • The most financially secure person may actually have the worst credit rating because they don’t need to use credit! For example, an individual who owns a house with no mortgage and pays cash for their every day bills would likely have an extremely poor rating as the banks would simply not have enough ‘credit’ information to fit their algorithm.
•  Consider:
  • You may have an “ideal” score but be unable to manage your debt effectively, or be unable to pay down the debt in a reasonable amount of time.
  • Immediately following bankruptcy, a person’s score may be poor – but they’re debt-free and can start to rebuild because of the “reset” the bankruptcy has provided.

We have a slogan here at Sands & Associates – “Knowing Is Not Owing” – whether or not you have debt, it’s important to be aware of your rights and responsibilities.

Book your free confidential debt consultation with a debt management professional in a local office near you today and get a financial fresh start!

The post Global News: “Focus on Financial Literacy Month” – 5 Things You Didn’t Know about Debt appeared first on Sands & Associates.

Job loss or reduced income

Very few Canadians are financially prepared to face a job loss, or a reduction in their regular income.  Even if you are eligible to receive EI benefits, the waiting period can often mean turning to credit to meet regular household expenses in the interim.  Many people will also redeem RRSPs or sell assets to keep financially afloat if their income becomes insufficient to meet their household demands.

Quick Tip: You do not have to be working in order to file a bankruptcy or a consumer proposal.  You are also entitled to a provincial exemption on most assets, including RRSPs.

Separation or divorce

It’s no surprise that a couple accustomed to two sets of income to run a household can easily become overburdened once the incoming funds are cut in half but the costs remain the same, as happens when one member of the couple moves out unexpectedly.  Expenses to set up a new household and legal costs to finalize a separation/divorce or child custody order can also accumulate quickly.  Stay-at-home parents are additionally often faced with a new set of challenges if they must attempt to re-enter the work-force.

Quick Tip: Co-signing a debt for your spouse can have unintended consequences.  If the other party doesn’t pay, the creditor can demand full payment from you.  Consider carefully before taking on joint debt!

Illness, injury or health-related problems

Whether the health problems result in time away from work or an increase in expenses due to out-of-pocket medical costs, unless there are sufficient savings to cover unexpected health issues, many people will wind up relying on credit.  Disability insurance often pays out just a portion of a person’s regular income, leaving an income gap as well.

Quick Tip: The added stress of debt can escalate quickly and aggravate underlying health problems.  Seek professional guidance from a licensed Trustee sooner rather than later.

Tax debt and student loans

Money owing to Canada Revenue Agency (CRA) can easily snowball into an unmanageable amount when unexpected reassessments or multiple outstanding return filings occur, often due to accounting errors or a lack of knowledge about proper filing and remittance requirements.  Because CRA is a powerful creditor and can garnishee your wages very quickly, tax debts are often urgent in nature.  Similar to income tax debts, monies owing for student loans can cause financial hardship as well.  Students in particular often overestimate their ability to repay student loans and underestimate the difficulties they may face entering their chosen field of work, leading to student loans being carried for long periods of time.

Quick Tip:  A bankruptcy or consumer proposal are the ONLY methods CRA or Student Loans will accept to reduce or eliminate debts in full.

Unexpected events

Many people surveyed over recent years have stated that general financial mismanagement and overextended credit have been a contributing cause to their financial problems.  The term “financial mismanagement” is broad and often encompasses events that many people experience, such unexpected expenses as major home repair, a family member’s illness; or a life-altering event such as divorce.  Money problems can and do happen to just about everyone!

For more information about your debt options, please contact us for a free, confidential evaluation of your situation.

The post Why do People File for Bankruptcy? appeared first on Sands & Associates.

Recent studies have shown that students may be extremely optimistic about their financial future and abilities to repay their student debts, despite the growing cost of living and ever-increasing tuition expenses. The financial reality, however, is that individuals carrying student debts are among the most financially at-risk groups facing insolvency.

Watch the clip here, and read more below:

Before you sign for your student loan

Students:

• Map out how much money you’ll need, factoring in tuition, books, rent, groceries and any other costs of living.
• Consider whether or not you can earn income via a part-time job while in school.
• Investigate all available resources, such as RESPs or scholarships and bursaries.
• Have a back-up plan for emergencies or in case your anticipated student loan does not come through.
• Don’t be tempted to spend all your funding if you don’t need to – avoid taking on more debt than necessary.

Parents:

• Think carefully before co-signing for your children’s education costs. In the event that the debt defaults, the creditors will be able to pursue you for the full amount due.
• Consider whether or not parent-funding will place an unmanageable strain on your own finances. Many pre-retirement individuals are faced with financial pressures supporting both younger and older dependents.

Post-grad

• Figure out a plan for how you will pay off your student debt. (Yes, it may take some time).
• Be realistic about how much you can afford to repay each month.
• Know your debts, grace periods and payment due dates.
• Avoid relying on more credit!

What Should You Do if You Can’t Make Your Student Loan Payments?

• Whether or not your payments are behind, don’t delay in contacting the relevant student financial assistance office.
  • The government has repayment assistance options at federal and provincial levels that may provide relief for you, such as reducing your monthly payments or even forgiving loan interest in some cases.
• Contact a local Licensed Insolvency Trustee to discuss your situation and consider all your options.
  • Bank-based student debts can be wiped out like any other type of debt in a Consumer Proposal or bankruptcy.
  • Government-loaned student debts can be cleared and forgiven under a Consumer Proposal or bankruptcy if it has been more than seven years since you were last a student.
  • If your studies ended in the last seven years you could have relief from repaying your government student loans while you deal with other debts, either with a non-borrowing Consumer Proposal consolidation that cuts debt down to what you can afford, or by debt forgiveness achieved through personal bankruptcy.
• A court may order your student loans be discharged (forgiven) under certain hardship conditions if your study-end date is more than five years old, but less than seven.

With over 35 years of experience, Sands & Associates is BC’s largest firm of Licensed Insolvency Trustees focused exclusively on assisting individuals and small businesses achieve their “debt-free” goals. You are not alone, we are here to help you!

Book your free confidential debt consultation today to connect with a caring non-judgmental Sands & Associates debt expert. We serve residents across BC.

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