Saving an Emergency Fund

Saving an emergency fund will enable you to handle expected expenses such as a job loss that might lead to financial ruin.

Saving an emergency fund by following these tips:

1. Set a specific goal such as to save enough to cover 4 to 7 months’ worth of expenses.

You don’t have to replace your entire income; just enough to cover expenses.

Remember in an emergency situation you will not be going on expensive vacations, purchasing fancy new clothes or other luxuries;

2. Set up a separate savings account into which you will deposit a fixed amount each payday;

3. An emergency fund is for the unexpected.

For example, appliances that stop working, getting laid off from work, a long illness or an accident.

It is not for things such as annual insurance costs or annual property taxes;

4. It’s alright to start small. Even saving $50.00 a month will grow to $600.00 in a year.

If you get a tax refund put it into your emergency fund. The same thing applies to a raise;

5. You can generate additional funds by doing the following:

  • a. Get a second job. You can handle this by keeping in mind that it is temporary.
  • b. Sell some of your assets. Have a garage sale.
  • c. Brown bag it, for lunch, instead of eating out. If you’re spending $10.00 for lunch each day you can take your lunch from home at a probable cost of $2.00. The $8.00 a day in savings will grow to $2,000 by the year’s end. Do you enjoy expensive coffees every day? There are savings to be had there too.
  • d. Car pool to work instead of driving your own car.
  • e. Stop smoking. Face it, you have tried to quit before. This time do it for good.
  • f. Get a piggy bank. Each night put all your spare change into the piggy bank.

Contact us: If you have any questions on this or wish to set up a FREE consultation with a government Licensed Insolvency Trustee call us today at 1-877-879-4770 (24/7) toll free or contact us online.

Why Maintaining a Good Credit Score is Important

Having a good credit score means you can borrow at favourable rates. However, it goes deeper than that.

If you do not have a good credit score you will not be able to get a credit card.

You need a credit card, in order to rent a car, even if you are going to pay the bill in cash. Shopping on the Internet is growing at phenomenal rates, but if you don’t have a credit card you cannot shop.

A poor credit score can mean you cannot buy a car or furniture on credit. Getting a mortgage at favourable rates to buy a house will not be possible without a good credit score.

How a credit score is established.

Credit Bureaus have a nine point scale is as follows:

R0 Too new to rate; approved but not used.

R1 Pays (or paid) within 30 days of billing; pays account as agreed.

R2 Pays (or paid) in more than 30 days, but not more than 60 days, or one payment past due.

R3 Pays (or paid) in more than 60 days, but not more than 90 days, or two payments past due.

R4 Pays (or paid) in more than 90 days, but not more than 120 days, or three or more payments past due.

R5 Account is at least 120 days overdue, but is not yet rated 9.

R6 (Code 6 does not exist.)

R7 Making regular payments under a consolidation order or similar arrangement.

R8 Repossession (indicate if it is a voluntary return of merchandise by the consumer).

R9 Bad debt; placed for collection; skip.

The FICO® score.

The FICO® score, developed by Fair, Isaac (the pioneer in credit scoring) is a number between 300 and 850 that lenders use to determine your credit rating. A FICO® score is a snapshot of your credit rating at a particular point in time. The higher your credit score the more likely you are to be approved for loans and receive favorable rates. Credit score is a figure which is generated by an algorithm which is based on the information in the credit report, as compared to the information on millions of other people.

How to Improve Your Credit Score

Let’s say you have the worst score possible and you have just been discharged from bankruptcy. You can develop a good credit score in two years if you follow this advice.

  1. Have your bankruptcy discharge certificate at hand.
  2. Check the credit bureaus to see if there are any errors on your credit report. You can get a free credit report by using this form. Errors happen quite frequently. The credit bureaus will correct errors. They will not remove information that is factual. Use this form to correct errors.
  3. Get a secured credit card to start to rebuild your credit.
  • Always pay your bills on time. Never, never be late.
  • Get new credit after a few months for purchasing an RRSP or a car.

You will find that in about two years your credit rating should be in a healthy state.

Communicating With Your Creditors and Collection Agencies

It happens that people at times get behind in paying their debts. This is often just temporary. For example, a person can lose a job but then in about a month get a new job at the same or better salary.

Creditors are quick to follow up when debts are not paid on time. They can phone you at home.

Communicating With Your Creditors and Collection Agencies.  How to handle Collection Calls.

If a collector calls you the first rule is to be polite. Get his name and the agency he works for and for whom he is collecting the debt. Explain your predicament saying it is just temporary.

Communicating With Your Creditors and Collection Agencies. Debt collection rules.

Debt collectors are not allowed to:

  • Make a charge or threat that has nothing to do with the collection of the debt;
  • Make abusive calls in which they lose their temper and use profanity or other verbal abuse;
  • Talk to your employer without your permission, unless it’s to confirm your employment;
  • Talk to you, your family or your employer in a way that will humiliate or distress anyone.
  • Make frequent calls that constitute harassment. Unless you provide the reason, a collector should NEVER call you more than once a day. Reasonable collection practices should not require that the collector call you more than once a week or every second week in order to determine if your financial situation has changed;
  • Give you a document that is made to look like an official court document when it isn’t.

Communicating With Your Creditors and Collection Agencies.   What if your financial situation is not temporary but more permanent?

If your financial situation is more permanent than temporary you should make a FREE appointment with a local Licensed Insolvency Trustee.

The trustee will review your financial information and explain how a bankruptcy or consumer proposal works.

One of the most power features of a bankruptcy and a consumer proposal is the Stay of Proceedings.

Once a bankruptcy or Consumer proposal is filed the Stay of Proceedings is activated.

This prevents unsecured creditors from collecting their debt, stops collection calls and stops interest from accruing.

The Stay will also prevent a wage garnishee or if one is in place the Stay will cancel the garnishee.

If you have any questions about this or other aspects of bankruptcy or consumer proposals you can set up a FREE consultation with our trustees, who are in every province and territory in Canada.

You can call 1-877-879-4770, 24/7, to book a Free Consultation with a licensed Trustee.

This article from Bankruptcy Canada’s Licensed Insolvency Trustee will answer the question “Does Vacation Pay Count towards Surplus Income Calculations?”

Part of your duties when you file bankruptcy is to report your income on an Income and Expense Statement each month and send that form to the trustee.

All your income has to be confirmed by pay stubs etc.

Vacation pay is considered income and must be reported to the trustee.

Note on the Income and Expense Statement the list of types of income a bankruptcy must report:

Does Vacation Pay Count towards Surplus Income Calculations?

Does Vacation Pay Count towards Surplus Income Calculations?

It is possible for you to take a vacation when you go bankrupt although you will be required to include any vacation pay in your reporting to your Licensed Insolvency Trustee as part of the calculation towards your surplus income payments.

If your vacation pay increases your income over a certain level you will be required to make surplus income payments, which will increase the time you will be in bankruptcy, and therefore also the cost of your bankruptcy.

Your income is averaged over the length of your bankruptcy, so if you have one month of very high income it will be set off over the other months of lower income.

Our bankruptcy calculator will calculate the exact cost of your bankruptcy and how long you will be in bankruptcy.