Covid economy non real estate

[mimico_polak]

Wasn't sure where to post this as it's not totally housing related....but the headline sure jumps out at you.

Personal bankruptcies jump by 15% in Toronto as government aid winds down

During the height of the pandemic, government subsidies kept consumer debt at bay resulting in fewer bankruptcies. Now that the subsidies have dried up, those numbers are on the rise.

www.thestar.com

 

[GreyGhost]

Wasn't sure where to post this as it's not totally housing related....but the headline sure jumps out at you.

Personal bankruptcies jump by 15% in Toronto as government aid winds down

During the height of the pandemic, government subsidies kept consumer debt at bay resulting in fewer bankruptcies. Now that the subsidies have dried up, those numbers are on the rise.

www.thestar.com

Another crap "news" article. Media needs to crawl in a hole and die. They have done it to themselves.

The key point is "Data released by the Office of the Superintendent of Bankruptcy Canada shows that the number of Canadians filing for personal bankruptcy may be returning to pre-pandemic levels". So we are still lower than typical pre-pandemic levels. Not interesting. Next.

 

[nobbie48]

Another crap "news" article. Media needs to crawl in a hole and die. They have done it to themselves.

The key point is "Data released by the Office of the Superintendent of Bankruptcy Canada shows that the number of Canadians filing for personal bankruptcy may be returning to pre-pandemic levels". So we are still lower than typical pre-pandemic levels. Not interesting. Next.

Never underestimate the ability for the population to misinterpret that as 15% of us going bankrupt.

I aged over 8% last month.

 

[Mad Mike]

Never underestimate the ability for the population to misinterpret that as 15% of us going bankrupt.

I aged over 8% last month.

These numbers are a bid deceptive, a lot of this is Consumer proposals -- one of the biggest scams out there. You've probably heard those kind-hearted commercials about 'debt relief' - those aren't kind-hearted services that help consumers, proposal administrators are cash pumps.

While I'm sure they are helpful to some, mostly they are helpful to the companies that provide the service. Here's how it works:

1) Proposal administrator sizes up the consumer position and collects $750 for this. While illegal, its common for them to coach consumers on moving debts around to disadvantage creditors, some coach debtors to pump up the debts before filing, this is an advantage to the proposal administrator. For example, they might suggest getting store credit cards (Brick, HomeDepot) to finance new furniture or appliances, transferring all available liquid assets (cash, securities, RRSP, TFSA), and maxing out credit cards and LOCs thru cash advance or spending. They also might recommend buying a new car and getting a new cell phone. Assets cannot be seized if they are financed with secured credit, so that new car and any equity in your house.

2) They file the proposal. The reason they try to pump up credit card debts is they know banks rubber stamp proposals at the creditor vote , so as long as they have the requisite amount owed to banks, the other creditors are stiffed. The debtor's credit is marked 'scortched earth' which prevents them from obtaining unsecured credit.

3) Once the proposal is approved, the debtors unsecured debt is reorganized. Creditors get about 30 cents on the dollar without interest, paid off over 5 years in twice-a-year installments. The proposal administrator collects a monthly payment from the debtor and distributes proceeds to creditors twice a year. The proposal administrator keeps 20% which is paid by the creditors.

4) After about 6 years the proposal ends (1 year for the filing,+ 5 for repayment). The debtor's credit is still at 'scortched earth' for another 3 years (9 in total), after that they can begin rebuilding credit.

As a banker, I saw thousands of these. All walks of life - people with nothing and nothing to lose, homeowners in million-dollar homes with fancy cars.

I was stung once personally. I loaned a small business in St. Cats $25,000. The owner was my customer, she ran a laundry service. I provided her with $25K worth of stuff on a rent-to-own basis. It wasn't a great business but it wasn't losing money. She wanted another kid, but couldn't sell the biz so decided to run up debt and do a proposal so she could stay at home. She had a $400K house with a 100K mortgage. She bought a new minivan, cell phone, furniture and appliances, and paid off part of her husband's credit cards with cash advances -- all untouchable -- then filed. The settlement gave me $6000, it took 6 years to collect.

The proposal administrator made $21,500 in fees, paid by the creditors.

 

[mimico_polak]

These numbers are a bid deceptive, a lot of this is Consumer proposals -- one of the biggest scams out there. You've probably heard those kind-hearted commercials about 'debt relief' - those aren't kind-hearted services that help consumers, proposal administrators are cash pumps.

While I'm sure they are helpful to some, mostly they are helpful to the companies that provide the service. Here's how it works:

1) Proposal administrator sizes up the consumer position and collects $750 for this. While illegal, its common for them to coach consumers on moving debts around to disadvantage creditors, some coach debtors to pump up the debts before filing, this is an advantage to the proposal administrator. For example, they might suggest getting store credit cards (Brick, HomeDepot) to finance new furniture or appliances, transferring all available liquid assets (cash, securities, RRSP, TFSA), and maxing out credit cards and LOCs thru cash advance or spending. They also might recommend buying a new car and getting a new cell phone. Assets cannot be seized if they are financed with secured credit, so that new car and any equity in your house.

2) They file the proposal. The reason they try to pump up credit card debts is they know banks rubber stamp proposals at the creditor vote , so as long as they have the requisite amount owed to banks, the other creditors are stiffed. The debtor's credit is marked 'scortched earth' which prevents them from obtaining unsecured credit.

3) Once the proposal is approved, the debtors unsecured debt is reorganized. Creditors get about 30 cents on the dollar without interest, paid off over 5 years in twice-a-year installments. The proposal administrator collects a monthly payment from the debtor and distributes proceeds to creditors twice a year. The proposal administrator keeps 20% which is paid by the creditors.

4) After about 6 years the proposal ends (1 year for the filing,+ 5 for repayment). The debtor's credit is still at 'scortched earth' for another 3 years (9 in total), after that they can begin rebuilding credit.

As a banker, I saw thousands of these. All walks of life - people with nothing and nothing to lose, homeowners in million-dollar homes with fancy cars.

I was stung once personally. I loaned a small business in St. Cats $25,000. The owner was my customer, she ran a laundry service. I provided her with $25K worth of stuff on a rent-to-own basis. It wasn't a great business but it wasn't losing money. She wanted another kid, but couldn't sell the biz so decided to run up debt and do a proposal so she could stay at home. She had a $400K house with a 100K mortgage. She bought a new minivan, cell phone, furniture and appliances, and paid off part of her husband's credit cards with cash advances -- all untouchable -- then filed. The settlement gave me $6000, it took 6 years to collect.

The proposal administrator made $21,500 in fees, paid by the creditors.

Damn….why the eff am I an honest person. Looks like if you have a house, and a car and boats and all that stuff….file a CP and you get to keep it for a fraction of the cost.

Ugh….damn this conscience.

 

[GreyGhost]

Damn….why the eff am I an honest person. Looks like if you have a house, and a car and boats and all that stuff….file a CP and you get to keep it for a fraction of the cost.

Ugh….damn this conscience.

If you want to take the game further, get your MIL to run the con. May even be able to cleanly gift you some of it. Her credit rating is less important and realistically there is a higher chance that she doesnt survive through all the years of repayments and the estate may not have much to pay out.

 

[mimico_polak]

If you want to take the game further, get your MIL to run the con. May even be able to cleanly gift you some of it. Her credit rating is less important and realistically there is a higher chance that she doesnt survive through all the years of repayments and the estate may not have much to pay out.

I need to do some research….her credit score doesn’t matter at all. But she won’t qualify for any loans without me as a co-signer

 

[GreyGhost]

I need to do some research….her credit score doesn’t matter at all. But she won’t qualify for any loans without me as a co-signer

Store credit cards? Unsecured loc she has had for decades but never used?

 

[mimico_polak]

Store credit cards? Unsecured loc she has had for decades but never used?

You smart bastard…..I need a new TV and some LEGO.

 

[mimico_polak]

Asked the MIL about doing it…she didn’t say no.

‘Not sure how much longer I’m gonna be alive so may not be a bad idea.’

 

[GreyGhost]

Asked the MIL about doing it…she didn’t say no.

‘Not sure how much longer I’m gonna be alive so may not be a bad idea.’

Store credit cards times dozens of stores could add up to a lot. If you pre-plan your purchases, you might even be able to get them all opened and filled before the credit report starts to light up.

 

[crankcall]

Idiot husband ( or not) of my brothers , sister in law. ( so not close) had over 100k in consumer debt and high interst store cards like CTC when he dies suddenly of a heart attack. The debt died with him.

 

[Mad Mike]

Asked the MIL about doing it…she didn’t say no.

‘Not sure how much longer I’m gonna be alive so may not be a bad idea.’

I can coach you on how to do it. My taste is 10% of the grift.

 

[mimico_polak]

Idiot husband ( or not) of my brothers , sister in law. ( so not close) had over 100k in consumer debt and high interst store cards like CTC when he dies suddenly of a heart attack. The debt died with him.

MIL had 1 heart attack already. And as you say….the debt dies with them.

MIL said a lot of their acquaintances in the US did that repeatedly. Rack up debt, bankruptcy, rinse and repeat.

 

[Mad Mike]

Idiot husband ( or not) of my brothers , sister in law. ( so not close) had over 100k in consumer debt and high interst store cards like CTC when he dies suddenly of a heart attack. The debt died with him.

That only works if the dead guy has no personal assets. Debt is not distributed to heirs and beneficiaries in Canada however the estate has to settle all debts before any inheritances are distributed or transferred. If there isn't enough in assets to cover, the debt dies.

The best planning is to give your inheritances out before you die -- then your unsecured debt dies with you (can't get blood from a stone).

 

[GreyGhost]

Since this has become an inheritance thread, this article isn't bad.

Forget the inheritance. Why cash gifts in early adulthood are a smart financial move – for parents and kids

Cash gifts before 40 can have a massive impact for setting your children up on solid financial footing, even if it means leaving them a smaller amount or no money later, says Bridget Casey

www.theglobeandmail.com

 

[mimico_polak]

Since this has become an inheritance thread, this article isn't bad.

Forget the inheritance. Why cash gifts in early adulthood are a smart financial move – for parents and kids

Cash gifts before 40 can have a massive impact for setting your children up on solid financial footing, even if it means leaving them a smaller amount or no money later, says Bridget Casey

www.theglobeandmail.com

I would prefer to give my kids money and see them enjoy it and help them navigate financial decisions instead of hoping they do the right thing after I’m dead.

If I got 50-100k today….probably drop the max amount into the mortgage (20% annually) and the rest on something fun.

 

[GreyGhost]

I would prefer to give my kids money and see them enjoy it and help them navigate financial decisions instead of hoping they do the right thing after I’m dead.

If I got 50-100k today….probably drop the max amount into the mortgage (20% annually) and the rest on something fun.

Rest? Normally the 20% is calculated using the original loan amount.

 

[mimico_polak]

Rest? Normally the 20% is calculated using the original loan amount.

Yup. Mortgage original amount is 463k, so 92.6k minus my prepayments.

Then extend the amortization again to drop the monthly and have a much smaller cash flow obligation.

 

[nobbie48]

These numbers are a bid deceptive, a lot of this is Consumer proposals -- one of the biggest scams out there. You've probably heard those kind-hearted commercials about 'debt relief' - those aren't kind-hearted services that help consumers, proposal administrators are cash pumps.

While I'm sure they are helpful to some, mostly they are helpful to the companies that provide the service. Here's how it works:

1) Proposal administrator sizes up the consumer position and collects $750 for this. While illegal, its common for them to coach consumers on moving debts around to disadvantage creditors, some coach debtors to pump up the debts before filing, this is an advantage to the proposal administrator. For example, they might suggest getting store credit cards (Brick, HomeDepot) to finance new furniture or appliances, transferring all available liquid assets (cash, securities, RRSP, TFSA), and maxing out credit cards and LOCs thru cash advance or spending. They also might recommend buying a new car and getting a new cell phone. Assets cannot be seized if they are financed with secured credit, so that new car and any equity in your house.

2) They file the proposal. The reason they try to pump up credit card debts is they know banks rubber stamp proposals at the creditor vote , so as long as they have the requisite amount owed to banks, the other creditors are stiffed. The debtor's credit is marked 'scortched earth' which prevents them from obtaining unsecured credit.

3) Once the proposal is approved, the debtors unsecured debt is reorganized. Creditors get about 30 cents on the dollar without interest, paid off over 5 years in twice-a-year installments. The proposal administrator collects a monthly payment from the debtor and distributes proceeds to creditors twice a year. The proposal administrator keeps 20% which is paid by the creditors.

4) After about 6 years the proposal ends (1 year for the filing,+ 5 for repayment). The debtor's credit is still at 'scortched earth' for another 3 years (9 in total), after that they can begin rebuilding credit.

As a banker, I saw thousands of these. All walks of life - people with nothing and nothing to lose, homeowners in million-dollar homes with fancy cars.

I was stung once personally. I loaned a small business in St. Cats $25,000. The owner was my customer, she ran a laundry service. I provided her with $25K worth of stuff on a rent-to-own basis. It wasn't a great business but it wasn't losing money. She wanted another kid, but couldn't sell the biz so decided to run up debt and do a proposal so she could stay at home. She had a $400K house with a 100K mortgage. She bought a new minivan, cell phone, furniture and appliances, and paid off part of her husband's credit cards with cash advances -- all untouchable -- then filed. The settlement gave me $6000, it took 6 years to collect.

The proposal administrator made $21,500 in fees, paid by the creditors.

RE #4 and the scorched earth, some government department keeps the records forever.

Someone was hired and stated on their application they had never been bankrupt. Several years later it was found that they had an old bankruptcy on record and they were fired with cause for lying on their application.