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June 2017 - Personal Bankruptcy & Consumer Proposal Statistics

il y a un mois

On August 31, 2017, the Office of the Superintendent of Bankruptcy released its most current statistics on personal bankruptcy and consumer proposal filings for Canadian debtors.  This article focuses on statistics for Personal Bankruptcy and Consumer Proposal filings in New Brunswick, Nova Scotia, and Prince Edward Island.

 

Canada

There were 60,459 personal bankruptcies and 62,718 consumer proposals filed in the 12-months ended June 30, 2017. Bankruptcies were down 5.8% and consumer proposal filings were up 2.6% as compared to the 12-months ended June 30, 2016.

 

New Brunswick

There were 2,742 personal bankruptcies and 1,722 consumer proposals filed in the 12-months ended June 30, 2017. Bankruptcies were down 7.1% and consumer proposal filings were up 14.4% as compared to the 12-months ended June 30, 2016.

 

Nova Scotia

There were 4,128 personal bankruptcies and 1,875 consumer proposals filed in the 12-months ended June 30, 2017. Bankruptcies were up 6.1% and consumer proposal filings were up 17.9% as compared to the 12-months ended June 30, 2016.

 

Prince Edward Island

There were 466 personal bankruptcies and 308 consumer proposals filed in the 12-months ended June 30, 2017. Bankruptcies were down 10.2% and consumer proposal filings were down 7.1% as compared to the 12-months ended June 30, 2016.

Powell Associates Ltd. is a licensed insolvency trustee focused on providing debt settlement, consumer proposal and personal bankruptcy solutions for individuals and businesses. We offer free consultations to review your personal financial situation and practical debt resolution options. Contact us to discuss your situation over the phone or book an appointment to meet us face-to-face in Saint JohnMonctonFrederictonCharlottetown or Dartmouth – it’s your choice.

Articles

How Interest Rate Increases Effect our Budget

il y a un mois

How Interest Rate Increases Effect our Budget

 

I’m 53. My wife and I bought our first house in 1988. The interest rate on the first mortgage was 8% and we had a second mortgage at 12%. I do chuckle at current interest rates and particularly with all the reaction to a one-qu

 

arter percentage point increase in the Bank of Canada Rate. But, I have experienced higher (or closer to normal) interest rates and many people have only experienced the crazy low interest rates that we have had for the last 7 years. I count myself lucky; my parents had an 18% mortgage rate locked-in for 5 years starting in 1982.

On July 12, 2017, the Bank of Canada raised their rate from 0.50% to 0.75%. The chartered banks then increased their Prime rate from 2.7% to 2.95%. Consumers will now experience an increase in their debt costs. For example: National Student Loans are a floating rate of Prime + 2.5% fixed rate. Those who live paycheque to paycheque will be affected first.

With mortgages, hose with a fixed rate will see no immediate change in monthly payments or how much is allocated to interest and principal; the impact will occur at renewal time. However, those with variable rate mortgages will feel this increase immediately – while the monthly payment might not change, the amount going to interest will go up and the amount going to reduce your principal payment will be less.

I don’t have a crystal ball and no one does. However, consensus seems to be that we are heading into a higher interest rate environment and interest rates will continue to rise. This means that, for those carrying significant debt, the amount of your disposable income going to non-productive interest expense will increase leaving less money for the necessaries of life or discretionary expenditures. Now is the time to consider this. Think about the debts you are carrying and the cost of that debt. Think about how much a 1% interest rate increase will affect your debt costs and whether you can sustain that increase. Think about whether the savings by having a variable rate mortgage, as compared to fixed rate, is worth the risk. If you own a house now, start to think about how you are going to afford a higher mortgage payment in the future. If you are just looking to buy a house, make sure you leave some room for higher payments.

On the positive side of the equation, the savers among us have been craving higher interest rates to provide more income and lower risk investment growth.

It seems that, although interest rates will be increasing, they will rise slowly as opposed to a significant spike. This will give people time to consider the effects but they do need to be considered. Getting “nickled and dimed to death” can occur with a slow but steady increase in interest rates. Each little increase can seem insignificant but, over time, these increases can turn out to be quite significant. If your debt payments are going to be higher in the future, now is the time to start making adjustments or looking at your options .

Article written by Robert Powell, CPA CA CIRP LIT, was published in the August 2017 issue of the District News.

Powell Associates Ltd. is a licensed insolvency trustee focused on providing debt solutions, consumer proposal and personal bankruptcy solutions for individuals and businesses.  We offer free consultations to review your personal financial situation and practical debt resolution options.  Contact us to discuss your situation over the phone or book an appointment to meet us face-to-face in Saint John, Moncton, Fredericton, Charlottetown or Dartmouth – it’s your choice.

 

How Interest Rate Increases Effect our Budget

il y a un mois

I’m 53. My wife and I bought our first house in 1988. The interest rate on the first mortgage was 8% and we had a second mortgage at 12%. I do chuckle at current interest rates and particularly with all the reaction to a one-qu

 

arter percentage point increase in the Bank of Canada Rate. But, I have experienced higher (or closer to normal) interest rates and many people have only experienced the crazy low interest rates that we have had for the last 7 years. I count myself lucky; my parents had an 18% mortgage rate locked-in for 5 years starting in 1982.

On July 12, 2017, the Bank of Canada raised their rate from 0.50% to 0.75%. The chartered banks then increased their Prime rate from 2.7% to 2.95%. Consumers will now experience an increase in their debt costs. For example: National Student Loans are a floating rate of Prime + 2.5% fixed rate. Those who live paycheque to paycheque will be affected first.

With mortgages, hose with a fixed rate will see no immediate change in monthly payments or how much is allocated to interest and principal; the impact will occur at renewal time. However, those with variable rate mortgages will feel this increase immediately – while the monthly payment might not change, the amount going to interest will go up and the amount going to reduce your principal payment will be less.

I don’t have a crystal ball and no one does. However, consensus seems to be that we are heading into a higher interest rate environment and interest rates will continue to rise. This means that, for those carrying significant debt, the amount of your disposable income going to non-productive interest expense will increase leaving less money for the necessaries of life or discretionary expenditures. Now is the time to consider this. Think about the debts you are carrying and the cost of that debt. Think about how much a 1% interest rate increase will affect your debt costs and whether you can sustain that increase. Think about whether the savings by having a variable rate mortgage, as compared to fixed rate, is worth the risk. If you own a house now, start to think about how you are going to afford a higher mortgage payment in the future. If you are just looking to buy a house, make sure you leave some room for higher payments.

On the positive side of the equation, the savers among us have been craving higher interest rates to provide more income and lower risk investment growth.

It seems that, although interest rates will be increasing, they will rise slowly as opposed to a significant spike. This will give people time to consider the effects but they do need to be considered. Getting “nickled and dimed to death” can occur with a slow but steady increase in interest rates. Each little increase can seem insignificant but, over time, these increases can turn out to be quite significant. If your debt payments are going to be higher in the future, now is the time to start making adjustments or looking at your options .

Article written by Robert Powell, CPA CA CIRP LIT, was published in the August 2017 issue of the District News.

Powell Associates Ltd. is a licensed insolvency trustee focused on providing debt solutions, consumer proposal and personal bankruptcy solutions for individuals and businesses.  We offer free consultations to review your personal financial situation and practical debt resolution options.  Contact us to discuss your situation over the phone or book an appointment to meet us face-to-face in Saint JohnMonctonFrederictonCharlottetown or Dartmouth – it’s your choice.

The New Debtor Prison

il y a 4 mois

Even though Debtor Prison was abolished in Canada in the mid 1800’s, some consumers still fear they will be sent to jail if they can’t pay their debts.

However we have found that a new form of debtor prison exists and this is due to excessive phone calls, emails, text messages and mail from creditors and collection agencies.   These tactics can leave a person feeling afraid to answer their own phone and for some it can cause undue stress and anxiety which can negatively affect their everyday life and ability to function at work.

Each Province in Canada has laws in place that deal with the collection of debt and creditors do have some legal recourse to recover monies owed to them such as Court judgments, wage garnishments and the seizure and sale of assets.  There are also laws to protect debtors from unscrupulous collection tactics, however, most people do not know their rights when dealing with collectors.

A Licensed Insolvency Trustee (LIT) can review your financial situation and help you file a bankruptcy or consumer proposal.  Both options are legal proceedings and will help you resolve your debt issues and will protect you from further legal or collection activities taken by your creditors.

For a free consultation you can contact us to discuss your situation over the phone or book an appointment to meet us face-to-face in Saint John, Moncton, Fredericton, Cornwall or Dartmouth – it’s your choice.