Thinking of Filing a Consumer Proposal in Ontario? You’re Not Alone!

If you’re thinking of filing a consumer proposal in Ontario, here are some facts for you.

In 2016, 22,956 consumer proposals were filed in Ontario. Nationally, 63,471 consumer proposals were filed across Canada. Both figures are up from 2015, meaning the number of Ontarians and Canadians filing consumer proposals is increasing. At the same time, the number of people filing for bankruptcy decreased slightly between 2015 and 2016.

Canadian household debt is growing — it’s currently at the highest it’s ever been. Easy access to credit and increasing interest rates are meaning people owe more than ever without a plan to pay it all off. A consumer proposal can be an alternative to making an application for personal bankruptcy, which is perhaps why it’s become more popular in recent years.

If you’re thinking of filing a consumer proposal in Ontario, you likely already know its definition. But to recap, a consumer proposal is a formal offer to your creditors to settle your debts, usually for an amount less than what is owing, but for a greater amount than the creditors would receive if you filed for bankruptcy. You offer to pay an amount that you can realistically afford for a fixed period of time – often up to five years.

The benefit of a consumer proposal over a bankruptcy is that you generally get to keep your assets. Often in bankruptcy, assets that can’t be paid for must be repossessed. Not so in the consumer proposal process. If your consumer proposal is approved by your creditors you will have a binding debt repayment contract. You can make your payments as agreed and you will have no further obligations to your creditors.

At Spergel, our Licensed Insolvency Trustees can create a customized consumer proposal for you that can set up a payment schedule with payments in higher or lower values at certain times each year, depending when you need more or less money. When you choose Spergel for filing your consumer proposal in Ontario, harassing collection calls and garnishments stop immediately after your proposal is filed.

If you have a high level of debt, but want to maintain your assets and lifestyle and can make set monthly payments, the consumer proposal process could be right for you. A Licensed Insolvency Trustee, such as the experts at Spergel, can help you determine if it’s a viable option.

To find out more about filing a consumer proposal in Ontario with Spergel, contact us today for a free consultation: 310-4321.

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Getting a Divorce in an Uncertain Real Estate Market

Colleen and Bill bought a home recently for $800,000. They lived in marital bliss for a few months, but then disaster struck — their marriage exploded and they ended up getting a divorce. They couldn’t bear to retain their home, or anything else they owned together. Colleen and Bill sold their house at the end of 2017 for $660,000. They ate $140,000 in losses on the value of their home alone, in addition to marital debt they carried.

Joint finances and assets are a big reason why many people stay in unhappy marriages. Having a plan to manage the financial impact of a divorce, especially if you have debt in your name and insufficient stand-alone income, is paramount.

If you’re considering getting a divorce, but worried about the cost of divorce — including that in an uncertain Canada real estate market — there are several items you may want to consider.

  1. Tax Implications

Getting a divorce can mean different tax deductions and debts when the CRA income tax deadline comes around. Consulting a financial advisor, particularly if you’re worried you will owe a tax debt, can help you navigate changes.

  1. Joint Accounts and Joint Debts

Joint financial debts — including a mortgage — can be a huge cost of divorce. You’ll need a plan to look at how much debt you can carry individually, plus how much you can take on as part of the divorce. A financial advisor can show you the options you have available and take steps to pay down your debt, leaving you in a secure financial position.

  1. Watch Additional Debt After Divorce

Getting a divorce can have financial implications in a lot of ways. First, there are the costs associated with lawyers’ fees and the like. But further to that, there are fees that come into play with smaller items. If you do decide to sell the house, for example, there may be a loss of profit. Even if you don’t sell, but decide to move out, you might have to buy new furniture, buy a new car, get your own credit cards, etc. It’s paramount you have a plan to deal with all of these expenses, especially if you don’t have your own sufficient source of income.

If you’re considering getting a divorce, Spergel’s Licensed Insolvency Trustees can help you develop a financial strategy and understand your debt relief options. Call us today for a free consultation: 310-4321.

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Ontario Housing Market on the Decline

The Ontario housing market has been showing signs of slowdown for some time now, but new measures, such as a provincial foreign buyers’ tax, new mortgage rules, and interest rate increases have cooled it even further.

In the Ontario housing market, house price indexes showed consecutive monthly decreases in the last quarter of 2017. Traditional dwelling types, such as attached and detached homes along with row houses, have all dropped in sales.

What does this mean for current homeowners? The decline of the Ontario housing market does not only affect house hunters. It also affects those who already hold a mortgage.

According to a CBC News article, a higher interest-rate environment could lead to a significant increase in Canadian household debt financing, as opposed to consumer spending. People would have to spend more on existing debt, such as their mortgages, and would have less to put towards other economic activity. This is what happened in the U.S. in 2006, bringing in a consumer-led recession.

Already, Canadian household debt is higher than ever. The average consumer debt in Ontario is $22,022. As the housing market has declined, mortgage values have also rapidly increased. When your mortgage term is up, you will probably face a higher interest rate at renewal, even if you have a fixed-rate mortgage. In addition, the increasing interest rates affect more than just mortgage debt. If you have a line of credit or a home equity line of credit, your payments will likely increase along with interest rates. It could also make it harder to sell your house if you need to make a move.

Those who currently hold a mortgage could benefit from getting their finances in order now as you may find in a declining market that you do not have enough equity to do it if your mortgage rate increases or the value of your property depreciates. A Licensed Insolvency Trustee can help you examine your financial situation so you’re not left staring at an empty bank account if interest rates increase further and the Ontario housing market declines even more.

At Spergel, we can help you best understand and explore the options that meet your current needs. We have the experience that translates to real results, no matter the current housing market. Want to talk to someone about dealing with debt that has become overwhelming?

We’re here to help: toll-free at 310-4321.

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BOC Interest Rate Increases to 1.25% — Highest in Nine Years

The Bank of Canada (BOC) has raised interest rates again. As of January 17, 2018, the BOC interest rate is now 1.25% — the highest it has been in nine years.

“Recent data have been strong, inflation is close to target, and the economy is operating roughly at capacity,” the BOC said in a press release.

“However, uncertainty surrounding the future of the North American Free Trade Agreement (NAFTA) is clouding the economic outlook.”

The BOC interest rate impacts all forms of debt, from mortgages, to student loans, to credit card debt. The interest rate was first increased in July of 2017, going from 0.5% to 0.75%. It rose again in September of 2017 to 1%. The January 2018 increase is the third hike in less than six months. The Bank of Canada says more increases are likely in 2018, though the Governing Council will “remain cautious” in determining future hikes.

The next BOC interest rate announcement is scheduled for March 7.

Two factors the BOC cited as a reason for increasing interest rates again were the strong economy and job growth. However, while the economy may be doing well, Canadian household debt is still at record highs. Some Canadians were already feeling pressure from the previous increases, as Spergel trustee Gillian Goldblatt told The Globe and Mail in October.

“You can live in a bubble for a while until some event snaps you out of it,” Goldblatt told The Globe. “That’s when we have people come to see us.”

The BOC did acknowledge the high level of Canadian household debt, but indicated that higher interest rates and new Canadian mortgage rules would likely curb some consumer spending.

The latest BOC increase means that those already struggling with debt will have higher interest to pay on those debts. For some, it could be the difference between meeting monthly payments.

At Spergel, we can help you adapt to this BOC interest rate increase, and potential further increases. Our team of experienced financial consultants can help you explore your debt consolidation options and make a plan to move forward.

Want to talk to someone about dealing with debt that has become overwhelming?

Spergel is here to help. Call us toll-free at 310-4321.



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Let’s Talk – Unique Financial Challenges Faced by People with Mental Health Issues

This month on January 31, 2018, the annual Bell Let’s Talk initiative is once again raising awareness about mental health in an effort to combat the stigma.

While mental health affects many parts of a person’s life and has different stressors and factors that vary from person to person, research shows that there is a clear link between financial health and mental health.

Stress can play a huge part in mental health — and financial debt can be a big stress inducer. According to The Globe and Mail, debt-related financial stress is linked to anxiety, depression, a higher risk of suicide, and can also affect physical health. Some experts have said financial stress is on par with obesity, poverty, or substance abuse.

Across the country, Canadians are slipping deeper in to household debt. Falling into debt can make mental health issues harder to cope with. It can become an unending cycle. A person is depressed or anxious and cannot find the motivation to pay their bills or go to work. The bills pile up and creditors start calling. The added financial stress exacerbates the pre-existing mental health issues, making them harder to deal with.

Even if there aren’t pre-existing mental health concerns, financial stress can cause situational depression or anxiety. A large amount of debt can seem like an impossible hole to dig yourself out of, or you may be worried about being able to afford the things you’ve become accustomed to. If job loss strikes or expenses increase, the idea of losing a house, not being able to send a child to school, or afford everyday items, such as food and utilities, can be debilitating.

Experts say financial stress plays a significant role in the incidence of suicide among middle-aged Canadians.

Some debt, of course, such as mortgages and the like can be considered good debt, but with our nation’s increasing reliance on credit and easy spending, it can be simple to create too much negative debt and feel like you’re spiralling out of control.

Bell Let’s Talk Day is on January 31, 2018. Participate in the conversation by using the hashtag #BellLetsTalk on Twitter or Instagram, watching the Bell Let’s Talk Day video on Facebook, or using the Bell Let’s Talk geofilter on Snapchat. Bell donates five cents for any of these social media posts plus any text messages or calls made from a Bell Canada or Bell Aliant phone.

Debt and financial stress doesn’t have to be unmanageable. At Spergel, we want to help you manage your debt load and lead a happier life.

Call us today for a free consultation: 310-4321.


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Loblaw Companies Ltd. to Lay Off 500 Office Workers – What to Do If You are Facing Job Loss

2017 has been the year of job loss; several major companies across Canada have announced their plans to lay off hundreds, if not thousands, of employee and Loblaw Companies Inc. is one of those.

Loblaw Companies Inc. announced in October that they were laying off 500 office workers. Many of the positions were terminated immediately.

The company cited a changing business strategy as the reasons for the layoff, though some have speculated the job loss may be caused by the upcoming increase in the minimum wage. On January 1, 2018, Ontario’s minimum wage went up from $11.60 to $14 per hour, and it is expected to increase to $15 per hour by 2019. It is possible other companies will follow in Loblaw’s footsteps and also cut jobs, especially as automation progresses. If your job security could be at stake, do you know what you would do?

If you are facing job loss or even concerned about the possibility it is best to be proactive with getting your finances in order and having a back-up plan.

Step 1: Take Stock of Your Reality

  • What is your current financial situation?
  • How much of your household budget are you responsible for?
  • How much debt do you carry?
  • What other streams of income do you have, if any?
  • How much do you spend each month? What does your money go towards?

Step 2: Assess Your Options

  • If you were laid off, how long could you survive on your savings for?
  • What types of compensation packages would you qualify for? Would you be eligible for any government assistance if you weren’t able to find something else right away?
  • If you were forced to change jobs, where could you apply? Would you need to stay in your specific industry or would you be able to look elsewhere? Do you need to stay in the area you’re living or are you able to move if necessary?

Step 3: Prepare!

  • If you don’t already have a personal budget, now is the time to start one. You need to know exactly how much you spend each month and what expenses could be cut or trimmed back.
  • Start looking at what other job possibilities might be out there. Reach out to connections and dust off your resumé.
  • Talk to a financial consultant to take stock of your financial situation. If you are facing a layoff, it is critical to have a plan for managing your debt. Not doing so can cause even more financial and emotional distress for you — especially if creditors start calling. Additionally, not making your payments on time will affect your credit report, and a poor credit score could impact your job search.

If you’re facing job loss or worried about job security, Spergel can help you assess your financial situation to make sure you’re prepared no matter what happens.

Call today for a free consultation: 310-4321.


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Bank of Canada Rate Announcement Next Week: Are You a Gambler?

Another Bank of Canada rate announcement is coming next week on January 17, 2018. It could mean another interest rate increase for Canadians — which would mean another mortgage rate increase for homeowners.

In 2017 there were four Bank of Canada rate announcements. The first came in July 2017, when the interest rate increased from 0.5% to 0.75%. In September 2017, interest rates increased again to 1%. In October 2017, the Bank of Canada announced interest rates would be staying at 1% — for now. They held the interest rate again in December 2017, but indicated more increases would be coming.

Experts are predicting the January 17 Bank of Canada rate announcement will be another pause, but that further interest rate increases will be coming later in 2018. The question to consider if you’re a homeowner, or a potential homeowner, is whether it is riskier to act now, or wait and see.

The first consideration to make is what type of mortgage you have — are you on a fixed-rate mortgage, or a variable-rate mortgage? If you have a fixed rate that is relatively low, the safest option may be to stay where you are. But if you have a variable-rate mortgage, now is the time to ask the tough questions.

You might be getting a good deal on your variable-rate mortgage now. However, if interest rates increase again (and possibly again in the future) that variable rate isn’t going to be looking so good. Can you afford your mortgage if interest rates increase more in the future? Don’t forget that interest rate increases don’t only affect your mortgage — they’ll impact all forms of debt. So, if you’re carrying large student loans or credit card bills that don’t have a fixed-rate repayment schedule, you could be in trouble.

Even if you think you can handle an interest rate increase now, have you thought about your future plans? Rising interest rates could result in you seeing a dip in the value of your property and will reduce the options you have regarding selling or refinancing. If you are thinking of moving or your mortgage is coming up for renewal, it would be a good idea to take that into consideration when you look at your financial situation.

The time is right to take good hard look at your finances to prepare for a shift in the housing market — unless you prefer to take the route of the gambler, waiting until the last second to see if he or she has a winning hand. When it comes to interest rates and mortgages, though, you don’t want to make a bet you can’t afford to lose.

At Spergel, we can help you best understand and explore the options that meet your current needs. We have the experience that translates to real results, no matter the current housing market. Want to talk to someone about dealing with debt that has become overwhelming?

We’re here to help: toll-free at 310-4321.

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New Year – New Rules: New Mortgage Rules Will Make Refinancing More Difficult

In October 2017, the Office of the Superintendent of Financial Institutions (“OFSI”) announced new mortgage rules for Canadians. The rules introduced a mortgage stress test for uninsured mortgages, and they also imposed tighter regulations for lenders.

These new mortgage rules will undoubtedly affect house hunters, but they will also have a impact on current homeowners, particularly when it comes time for mortgage refinancing.

According to, OSFI’s changes will tack on six to seven percentage (6-7%) points to the average borrower’s gross debt service ratio (“GDS”). Those considering refinancing to consolidate debt into a mortgage could face greater challenges.

In the past, many consumers have been concerned about their loan-to-value ratio (“LTV”): the size of the loan compared to the value of the property. However, with the new mortgage rules in place, lenders will be paying closer attention to other evaluations, such as the GDS and total debt service ratio (“TDS”).

The new mortgage rules mandate that lenders need to pay closer attention to LTVs, which means more lenders will be looking at the GDS and TDS ratio for potential borrowers. Where LTV is calculated solely on the size of the loan to value of the property ratio, GDS is calculated based on the percentage of your income needed to cover monthly housing-related expenses and TDS is calculated based on the percentage of your income needed to cover all debts.

Costs included in your GDS include mortgage payments, property taxes, heating expenses, and, where applicable, condo fees. Your TDS includes credit card payments, credit line payments, and car loans.

Under the new mortgage rules, the GDS and TDS will also be more important for qualifying for home equity lines of credit (“HELOC”) as lenders are mandated to look at HELOCs with a higher level of diligence.

If your TDS is high, you will need a plan to deal with your debt if you want to be able to qualify for a mortgage. Even if you have “good payment” habits and manage minimum payments, most lenders will not extend financing if the numbers don’t add up.

What can you do if you need to lower your GDS or TDS?

Reducing your GDS can be challenging as it is tied to your household payments.  Therefore, the only ways to reduce your GDS are to either earn more money, or reduce housing payments, either by downsizing or renegotiating your mortgage terms.

With TDS, reducing your debt load is a good first step if that is what is driving up your TDS. Decreasing the amount you owe on your credit cards, lines of credit, or car payments will lower your TDS. Increasing your credit score could also help as many lenders will look at that number and your credit history.

You could also consider increasing your down payment if you are shopping for a home, or adding rental income. If you co-own a home, GDS and TDS looks at the debt loads of both you and your partner, so make sure you are both on the same page.

Spergel can help you find the best plan to minimize debt and increase your credit rating so that you’re ready to withstand the new mortgage rules.

Call us today for a free consultation: 310-4321.

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Why You Should Be Paying Attention to the Canadian Real Estate Market

Do you pay attention to the Canadian real estate market? If you already own a home, it may not seem necessary to stay on top of housing trends across the country. But for those who are considering moving in the future, want to ensure their mortgage is paid off as quickly as possible, or want to get out of debt, keeping track of the Canadian real estate market is vital.

In 2017, Canada saw much change in its real estate market. The Bank of Canada introduced two interest rate increases, taking the national interest rate from 0.5% to 1% — the hike was the first increase in seven years. The interest rate increases affect all forms of debt — student loans, lines of credit, and mortgage rates. For those who opted for a variable-rate mortgage, the interest rate increase could mean larger payments. Those with a fixed-rate mortgage won’t see any increases right now, but they could see changes when it comes time to renew.

For anyone with a mortgage renewal coming up, the interest rate increases could mean renewing at a higher rate. If an existing home equity line of credit has been taken out, increased rates could also affect those payments. Recently announcements suggest that interest rates are expected to continue to rise in 2018.

Rate increases weren’t the only change the Canadian real estate market saw in 2017. New mortgage rules were also implemented nationally. The Office of the Superintendent of Financial Institutions announced a new mortgage stress test in October 2017. The new rules mean that uninsured mortgages with a down payment of more than 20% must be stress tested. The effect is that homebuyers will be able to afford less house for the same amount of money. The new mortgage rules also put stricter limitations on lenders. Federal lenders, such as banks, will now have to look closer at the loan-to-value ratio (LTV) when considering mortgage renewals, meaning more emphasis may be put on other factors, such as your credit score, history, and your gross total debt services and total debt services ratios.

Experts predict the OSFI limitations will slow down demand in the housing market, but they’re not sure by how much. The new mortgage rules may also make it more difficult to qualify for a home equity line of credit as, like with mortgage renewals, lenders are encouraged to look at more than just the LTV.

Housing trends from 2017 showed sales of traditional-style housing, such as single-detached and single-attached homes, are dropping while non-traditional, but less expensive, dwelling types, such as condos, are increasing in certain areas.

Between the new mortgage rules and the interest rate increases, Canadians are likely to have less equity available in their homes, which means if you were hoping to rely on your house or a home equity line of credit to pay down debt or fund a major purchase, there may be less money available.

Spergel can help you get out of debt, whether it’s influenced by the Canadian real estate market or otherwise.

Call us for a free consultation today at 310-4321.

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Sears Canada Bankruptcy – The Good, The Bad, and The Ugly

In October 2017, Canadians learned they were losing a retail titan as the Sears Canada bankruptcy was announced and along with it the plan to lay off 12,000 employees across the country.

The company has been losing money for some time and has been closing stores for the past several years, but the announcement of total liquidation came as a shock to many. Seventy-four full-line stores, 49 Hometown dealer stores, and eight Sears Home Stores are set to close by the end of 2017.

Since the Sears Canada bankruptcy announcement, analysts have looked into what caused it. While there are many factors, competition, lack of forward movement, and poor fiscal management are cited as the main reasons.

Whatever the cause, the implications are clear: 12,000 people across Canada are laid off work and the country is losing a retail icon.

Additional implications are:

  • Mall retailers will have to find replacement stores to fill the empty spaces Sears occupied.
  • Other apparel stores, such as Winners, Hudson’s Bay, Marshall’s, and Reitman’s, could pick up more business. Home improvement stores, such as Home Depot, Home Hardware, and Lowe’s Canada could see an uptick in sales too.

If you are facing being laid off work, in the retail sector or otherwise, there are several things you can do to prepare.

  1. Make sure your finances are in order.

Do you have a monthly budget? How much debt do you owe? If you’re faced with a job loss, it’s important that you have a plan to keep paying your debts. A poor credit score could affect your job search and digging yourself deeper into unsustainable debt will only hurt you in the long run.

  1. Assess your options.

Where else might be hiring in your field? Are there other streams of income you can access, such as self-employment? What types of severances or government benefits are you entitled to and for how long? Knowing this information can help you plan ahead.

  1. Begin your job search now.

If you’re worried about your job security, don’t delay in starting your search or setting up another form of income. Update your resumé and think about places you could apply. If you’re in the retail industry, for example, are other stores hiring in your area? If not, how could your skills be transferrable to another industry?

  1. Have a plan to deal with debt.

If you owe debt, it’s best to have a plan before you’re laid off work. A Licensed Insolvency Trustee can provide you options to manage your debt so you don’t dig yourself deeper into the hole.

At Spergel, we can help you you understand your options for debt relief and better financial stability if you are facing being laid off work.

Call us today for a free consultation: 310-4321.


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