How to Avoid Bankruptcy and Save Your Assets

Bankruptcy is not the only option for someone in severe debt there is another option which people should be aware of namely the consumer proposal.

Whereas in a bankruptcy your assets are assigned to a trustee (subject to exemptions) who then liquidates them to pay your unsecured creditors, this is not the case for a consumer proposal. The consumer proposal, under the Bankruptcy and Insolvency Act, is an offer to pay your secured creditors an agreed amount of money to extinguish your debts and thus avoid bankruptcy. This money is paid interest free over a period of up to 5 years.

When a consumer proposal is filed 3 major things happen:

Interest stops on your debts

Your assets are protected from the creditors and a stay of proceedings is in place

Creditors can no longer contact you by phone or mail or any other means

So long as you keep up the payments your assets are protected under the Act. This option is usually the preference for people with savings or equity in their house or for small business owners who need to protect their business assets to maintain an income. If three payments are missed then the proposal is annulled and you are back to where you started!

Consumer proposals do adversely affect credit and are reported to the Equifax and Transunion credit bureaus until 3 years after the proposal is paid off. One option to speed up credit building is to pay off the proposal earlier which will remove it from the credit bureau earlier.

Other advantages of the consumer proposal over bankruptcy are:

If your income increases during a proposal the payments to the creditors does not. In a bankruptcy your income is monitored and payments to creditors adjusted accordingly

Inheritances and windfalls are kept whereas in a bankruptcy these are paid to the creditors.

You can still be a director of a company whereas in a bankruptcy you cannot

You can still sponsor someone into Canada, in a bankruptcy you cannot do this until discharged.

There is the opportunity to rebuild your credit faster by paying off your proposal early

Bankruptcy is not the end of the world as some people may believe and may be seen as a good opportunity to press the reset button and start again. Even if there are assets which may be seized in a bankruptcy the debtor usually has the option to pay additional funds in lieu of the asset value.

Easy To Learn, Important Finance Courses

The digital age has proven useful in so many ways, from connecting us to faraway near and dear ones to enabling us to learn like we never have earlier. Online classes on personal finance are a great means to stay sharp when it comes to managing your budget and financial future, and these free, easily usable courses are a great way to begin. These courses will help you to manage your money, savings and budget. You will be able to manage debt successfully. It will help you to understand and analyze the choice of insurance products available to you today and why they are so vital. You will have a good acumen of wages, tax, and government benefits. You will learn about consumer rights as well as renting and buying accommodation. These courses will help you to plan for the future.

Personal financial management course offers broad based knowledge and detailed understanding of financial concepts and terms used in daily life for planning out personal finances. Managing your money is difficult, and enormous tuition costs make going back to school simply unrealistic. Fortunately, you don’t have to go back for a degree in personal finance, because plenty of great universities, organizations and non-profits and offer free online personal finance management courses to help you educate yourself all there is to learn about what to do with your pay.

There are many online sites with awesome lessons on everything from setting your priorities, all the way to choosing the right insurance policies and even estate planning. With glossaries and quizzes of key terms, personal financial management is a simple, easy-to-understand course that can help give you the extra boost you require when learning about your finances. The description of this course promises that by the end of the course, you will be able to set objectives, implement plan, and apply your new knowledge for the rest of your life.

Personal financial management course is aimed at improving lives through financial education and it is equipped with tools to answer any and every question you may have. It comprises things like budgeting and saving money during the vacation. There are great websites available for all those looking to streamline their budget and learn a thing or two about finance.

If you have to file for bankruptcy, you would need the debtor education and bankruptcy courses. These high-energy and motivating courses are not only fun, but also they meet all court requirements for pre-discharge debtor education in all states and territories. The latter course teaches you about the types of bankruptcy that can be filed.

A few years ago, a step was added to the bankruptcy filing process. Individuals filing for bankruptcy must take part in an approved credit counseling course before filing for bankruptcy. Also, before you get a discharge at the end of your case, another class on personal financial management must be taken. There are very limited exceptions for both requirements, however very few folks will qualify for them.

Once you have filed for bankruptcy, you are required to complete a debtor education course before you can get your discharge. In addition to the credit counseling need in bankruptcy, debtor education is required. In a nutshell, before you can file for your insolvency, you are required to complete a credit counseling course and before you can receive a discharge, you need to complete a debtor education course.

After your case is filed, you must complete the debtor education course. If you filed for straight bankruptcy, you have to finish it within 60 days of the date assigned for your meeting of creditors. In corporate bankruptcy, it must be completed before you make your last plan payment.

Similar to credit counseling, an approved agency must be used to file your certificate of completion with the court (the course can be completed in person, online or over the phone). If you fail to complete the requirement of debtor education course, the court can close your case without a release and additional fees will have to be paid in order to reopen your case to file your certificate.

The focus of debtor education course is on life post bankruptcy. It educates you on how to manage your money, use credit judiciously, and make the most of your bankruptcy discharge. The primary purpose of debtor education is to educate you on how to make sound and robust financial decisions to prevent bankruptcy in the future.

Since the debtor education course will cover money management techniques, you will still have to create a budget using your income and expenses after bankruptcy. But in contrast to credit counseling (which tries to figure out whether you need to file for bankruptcy), the focus of this course will be primarily in educating you about how to manage your money, budget and use credit wisely after a discharge in bankruptcy is received.

10 Easy Ways To Organize Your Business Finances

Whether you are a new entrepreneur or a more experienced business owner, taking control of your finances can feel like a part-time job. Some simple tips can help you streamline your time, organize your finances and reduce the stress of business money matters.

1. Keep Your Bills in One Place

When the mail comes, make sure it goes in one place. Misplaced bills can be the cause of unwanted late fees and can damage your credit rating. Whether it’s a drawer, a box, or a file, be consistent. Size is also important. If you get a lot of mail, use an area that won’t get filled up too quickly.

2. Pay Your Bills on Schedule

Bill paying can be simplified if it’s done at scheduled times during the month. Depending on how many bills you receive, you can establish set times each month when none of your bills will be late. If you’re paying bills as you receive them, chances are you’re spending too much time in front of the checkbook. Although bills may state “Payable Upon Receipt”, there’s always a grace period. Call the creditor to find out when they need to receive payment before the bill is considered late.

3. Read Your Credit Card Statements

Most people take advantage of low interest credit card offers but never read their statements when paying the bill. Credit cards are notorious for using low interest as bait for new customers then switching to higher rates after a few months. Make a habit of looking at your statement carefully to see what interest rate you are paying each month and if any transaction fees have been applied. If the rate increases or a transaction fee appears on your statement, a simple call to the credit card company can oftentimes be beneficial in resolving the matter. If not, try to switch your money to a more favorable rate.

4. Take Advantage of Automatic Payments

Most banks offer a way to automatically deduct money from your account to pay creditors. In addition, the creditors usually offer a lower interest rate when you sign up for this payment option because they get their money faster and on-time. Consider it as one fewer check to write, envelope to lick and stamp to buy. Just make sure you record the deduction when the automatic payment is scheduled or you run the risk of bouncing other checks.

5. Computerize Your Checkbook

Using a software program is a handy way to organize your finances. Whether it’s Quicken(r), Microsoft Money(r) or another package, these easy-to-use programs make bill paying and bank reconciliation a cinch. Computer checks can be ordered almost anywhere and fit right into most printers. Once the checks are printed, all of the information is automatically recorded in your electronic checkbook. Furthermore, many banks have direct downloads into these software packages so when money is deposited or withdrawn, the transaction is entered immediately onto your computer. And, when it comes time to do taxes, it couldn’t be easier.

6. Get Overdraft Protection

Most banks have a service where, if you run the risk of bouncing a check, the money will come from another source. For a nominal fee, the bank will link your checking account to either a savings, money market, or credit card so the embarrassment of bouncing a check will be avoided. Call or visit your bank to learn about this convenient feature.

7. Cancel Unused Accounts

Whether it’s a credit card or bank account, write a letter requesting that the account is formally closed. Not only will this improve your credit score, it is a useful way to avoid money from being scattered all over the place. Don’t let department stores and credit card companies lure you into opening new accounts by offering favorable interest rates and purchase discounts. It’s easy for credit to get out of hand by taking advantage of every credit offer that comes your way.

8. Consolidate Your Accounts

If you have several credit card accounts with outstanding balances, try to consolidate them into one. Be careful and check the balance transfer interest rates and one-time fees. Also, make a list of all your open Money Markets, Savings, CDs, IRAs, Mutual Funds, and other accounts to see if any consolidation can be done. Keeping your money in fewer places eliminates all of the guesswork involved and reduces errors.

9. Establish Automatic Savings

Create a link from your checking account into a savings account that will not be touched. This can usually be done through the banks and automatic amounts will be transferred over each month. Most people will not put money into a savings account on a regular basis. They may wait until a large tax refund check arrives or some other event to actually deposit money into savings, retirement or other accounts. If you establish an automatic savings deposit every month, your accounts will begin accumulating money faster than you think.

10. Clean up Your Files

Make sure your paid bills are organized in a filing cabinet. Keep individual files for paid bills. Go through your files at the end of each year and throw out bills and receipts no longer needed for auditing purposes. Contact your local IRS office to see how long records need to be kept for audits. Usually federal tax return audits can be done three years back but cancelled checks may need to be kept for seven. Consult the Internet for auditing and records-keeping procedures for your state or region.

Financial Planning: What’s Your Designation?

If you’re shopping for financial planning services, it may seem like a jungle out there. There are advertisements everywhere, and everybody seems “nice,” but nice won’t cut it when it comes to your money. How can you cut to the chase and find a financial planning expert that you can trust.

Start by learning what the different designations mean. You may have noticed that there are three popular financial designations that most financial planners hold. You’ll want to choose one with one of the following designations.

Like many CPA’s, a Certified Financial Planner (CFP) must attend about two years of training and pass a rigorous test. This designation is given by the Certified Financial Planning Board of Standards, a national organization. After two years of preparatory courses, a Certified Financial Planner must earn a passing grade on a ten-hour test given over the course of two days. The Financial Planning Association can provide you with a listing of Certified Financial Planners.

You may have also encountered some Chartered Financial Consultants. These graduates of American College in Pennsylvania have completed a series of exams and obtained real life experience before earning their designation. However, the program is geared more toward the insurance profession than broad based financial planning. The Society of Financial Professionals can provide you with a listing of these consultants.

The American Institute of Certified Public Accountants offers its own designation, a Personal Financial Specialist (PFS). Certified Public Accountants can earn this additional designation by completing a series of comprehensive tests and demonstrate experience in financial planning. Most of these designates are members of the National Association of Personal Financial Advisors, and they can refer you to a PFS in your area.

All of the above certifying agencies require at least three years of experience prior to certification. Other designations do exist, but these three are the most reliable. Since many unscrupulous individuals decide to call themselves “financial planners,” you’d be wise to look for one with a certification from a nationally recognized organization.

Since the Securities and Exchange Commission doesn’t regulate smaller financial advisors (those with under $25 Million under advisement), it is up to you to screen your financial planner carefully.

You can begin by checking on the website of the National Association of Securities Dealers website. They list financial planners who have been disciplined on their website. Information is also available by telephone from this association’s toll free number (800-289-9999). Also check with your state’s securities division for disciplinary actions and complaints.

Ask your planner for a copy of Form ADV, Part II. If you aren’t familiar with the form, they will be. This form is required by the Securities and Exchange Commission from every financial planner and should spell out how and what the planner will be paid and any incentives they may earn. Sometimes they will provide this information in brochure or pamphlet form, but you’ll know up front what your fees will be.

Finally, check references. A reputable planner won’t mind giving you a few references to call. Find out if they handle portfolios similar to yours and if the client is satisfied with their services. Ask about fees.

It’s your future, so doing a little homework up front and making sure that you’re getting what you pay for is well worth it in the long run. Make sure that your financial planner holds a nationally recognized designation and check him out before you hand over your hard earned money. Your time and effort is a wise investment when shopping for a financial planner.