How Does a Credit Score in Canada Really Work?
In theory, a credit score should be quite simple – through an algorithm, you’re assigned a numerical score that determines your credit worthiness. The score is a weighted average of many factors, including but not limited to: Your payment history Your credit utilization rate, which is how much of your credit limit you have uses versus how much you have available to you Balance owing on your debts The length of your credit history Public records (such as bankruptcy) Number of inquiries into your credit file But the reality is not that simple. Here are the complicating factors: Each of the two major credit rating agencies, Trans Union and Equifax,…
23% of Canadian Millennials Believe it is Okay to Lie When Applying for a Mortgage
Guest post by Jayde Melling Almost a quarter of millennial house hunters have justified lying on their mortgage applications. The study, conducted by Equifax Canada surveyed over 1500 18 to 34 year old first time buyers and found a rate of justifying lying much higher than the general population, which is at just 12%. This has been put down to millennials struggling since the financial crisis to gain the personal finance needed to purchase a property. In order to secure a bank loan, younger home buyers view lying as a victimless crime that can help them to get on the property ladder. Credit Scores Among Young People Many people require help with personal finances due to…
Filing bankruptcy with gambling and substance abuse problems
A readers asks First and foremost I’m a gambling addict and also have problems with substance abuse. I have accumulated so much debt that I have fallen into a deep depression and I just beat myself up daily because I did it to myself. My debts: $3,000 of credit card debt, $11,000 line of credit, $11,000 in payday loans (the worst I know). I pay around $380 a month just on interest charges; pretty much my debts are not going away. I have personal loans from friends of $6.500 and a student loan of $5,000 – I haven’t made a payment since around 2008. I also have a payday loan…
Wall Street Bailouts Caused the Canadian Housing Crisis
The consequences of the 2008 Financial Crisis and the remedies initiated by the Federal Reserve to deal with it have reverberated throughout the global housing markets during these past 10 years. Readers may recall that in late 2008, the U.S. Federal Reserve implemented a money-printing program euphemistically referred to as Quantitative Easing (“QE”) in order to prevent a total collapse of the global financial system. In colloquial terms, the Fed, the White House and the United States Congress co-operated to bail out Wall Street after they screwed up. Money-printing causes price inflation in that more dollars are chasing a fixed quantity of assets. This has been particularly true for real…
The Next Recession – a Survival Guide for Canadians
The Financial Crisis initiated by the collapse of Lehman Brothers in September 2008 and the ensuing Great Recession of 2009 to 2011 has been the most consequential event of the 21st century thus far. It is the direct cause of the economic inequality we see in the Western world today, including in Canada. As a Licensed Insolvency Trustee, I had a front row seat during these events that started over 10 years ago. I saw the devastating impact it had on the lives of ordinary Canadians, many whom ended up being my clients, having to resort to either filing a consumer proposal or filing for personal bankruptcy. My clients were…
Meeting of Creditors Requested for Consumer Proposal
A reader asks: I filed a consumer proposal back in August and a meeting was just called with my creditors. I only have BMO (majority holder) and RBC to deal with. They rejected my first offer and we are counter-proposing with another amount. I feel like we should just accept the amount that they want at this point. But I know that I am being helped so I pay the least in the end. I don’t want the proposal to be rejected. It sounds like it’s only a difference of $50 from what I could gather. How likely is it to be rejected? Or does this meeting just serve as…
I’m Behind in My Consumer Proposal Payments!
A reader asks I filed a Consumer Proposal back in April where I’ve been paying $175 biweekly. However, I ended up losing my job back in July and the payments after that were coming out of my savings. I am now down to the last $100 to my name, literally. The next $175 payment is scheduled to be paid in a week’s time, and needless to say, that ain’t going to happen thanks to my broke ass. I filed for Employment Insurance yesterday (I’m stupid and don’t know why I didn’t think of doing it sooner), so there is a possibility it may be approved and I’d get some funds…
Transferring a Home Before Bankruptcy
A reader asks: My father fell critically ill earlier this year. As a result, he is unable to pay his credit cards as he is not working. The bills are very large. He has no financial assets other than his a commercial property (owned outright). What options does he have? In relation, can the property be sold to my brother and/or proceeds transferred to him (inheritance), then my father proceed to file bankruptcy without repercussions? Here is a breakdown of his finances: $1.2m – commercial property – owned outright Approx 60-80k in credit card debt only Zero income stream from any source, sadly. My father is not a future planner.…
The Relationship Between Personality Traits and Financial Success
During my 20 years as a financial professional and business owner in Toronto, I’ve gotten to know some very successful people and not so successful people. Here are my observations about the former and the latter within the framework of the Big Five Personality Traits, namely (1) Agreeableness; (2) Conscientiousness; (3) Extraversion; (4) Neuroticism; and (5) Openness to Experience. Agreeableness: “Nice guys finish last” – in my experience, this saying is very true. The “difficult person” is usually going to come out ahead financially because he can negotiate more aggressively in his own best interest, be it a real estate deal, salary negotiation or business deal. He won’t be overly concerned…
20 Year Old Considering Personal Bankruptcy
A reader asks: I messed up big time but I’ve learned a lot of lessons. I earned just a hair shy of $200,000 in my first year as a real estate agent at 20 years old. I was way too immature to have that kind of money, and blew most of it without saving. I invested my tax savings in growing my team which I thought would have been an easy pay back. Lost it all. No worries though just sell more houses. Depression strikes, mother gets very sick, I took on an expensive apartment and car. Not emotionally mature enough to handle these things like an adult yet. Hemorrhaging…
