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The Right Way to Avoid Bankruptcy



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the wealthy life is brought to you by

investment dealer Raymond James life

well-planned see what a Raymond James

adviser can do for you when you're in

over your head behind on your bills and

creditors are calling what do you do is

bankruptcy the only option with me today

is Chris grew a debt consultant from

four pillars Financial Group welcome

Chris thank you so much so how did you

get into this business interesting story

I spent 26 years in finance and as I

kind of rolled out of that I got into

non prime lending which was an emerging

market for people that had had poor

credit giving them an opportunity to

actually get some traction and rebuild

their credit again by writing loans for

them and that led me along the path to

look for the source of the poor credit

which would be a debt restructuring

company and that's four pillars

financial consultants and I became

involved with them about five years ago

I like the model that they represented

and that we kind of had a similar

philosophy if you will about life and

helping people and so that's how I

became a debt consultant so what does a

debt consultant do them a debt

consultant consults with people with

regard to what their options are

regarding debt so you mentioned

bankruptcy in your opening and a lot of

people run right to bankruptcy and say

well gee that's the one I'm most

familiar with I've heard that term all

my life it's the magic bullet I should

just go bankrupt if something happens to

me and really bankruptcy should be

considered as an option but as an option

within a large picture there are many

options available to people that have

unmanageable debt and as a consulting

company we look at all of them not just

one or two we look at every option

available and find the best solution for

our clients so there is a big difference

between a debt consultant and a

bankruptcy trustee well the big

difference is the bankruptcy trustee is

a officer of the court and represents

the creditors okay so that's kind of

their focal point is the creditor side

of the issue whereas debt consultant is

a person that is hired by the debtor and

has the debtors best interest at heart

so do you have a success story that you

can share where you've helped someone

actually have a story that illustrates

actually the question you asked me is

the difference between what is a

bankruptcy trustee doing what and what

do we do had a client approached us

about six months ago she was distraught

she had tried everything to deal with

her debts she'd gone to her bank trying

to do a consolidation loan which is

something we recommend somebody tries to

do didn't qualify for that because she

had already failed to make some payments

on her on her debt so she wasn't calling

fighting for new new credit she had been

to two bankruptcy trustees and they told

her she wasn't able to file a bankruptcy

because she wasn't actually insolvent

because she owned a home with two

sisters of hers so she had this asset

she wasn't able to deal with and she

came to me she said Chris I know you

can't help me because I've been told by

so many people that I can't be helped

because I have this house that I own

with my sisters well what we do is we

kind of delve into the information what

we found out was that over the years she

had actually taken most of her equity

out of the home in the form of her

sisters giving her money and in actual

fact there was only $10,000 equity that

belonged to her left in this house we

made an arrangement with a lawyer and

had her sell her portion of that house

to her sisters so she now no longer had

the asset and we had a lump sum of ten

thousand dollars to work with to make an

offer of settlement to the creditors

there was quite a lot of debt I think we

offered nine cents on the dollar in a

lump sum settlement

but that client that client is now at a

debt that settlement offer was accepted

how do they get in that situation in the

first place absolutely do you see some I

didn't answer that because I really had

a preconceived notion when I got into

this that I would meet people that were

kind of if you will flaky and it's not

the case that all people what happens to

people is life you know I just had a

client that I talked with just a couple

of days ago who had a contract with a

company here in town the company was

bought out by another company and the

contract was not renewed well he'd had

the contract for almost as adult life

sixty-five years old all of a sudden

there's no source of income you know

where do you see that coming from out of

them and you know you have other

situations where there's illness and

families or marital breakup you know

death all kinds of reasons why people

end up not being able to handle the debt

that they have on the

so when they get into these tough

situations obviously it affects their

credit rating is it better to do debt

restructuring or a proposal to deal with

the creditors versus bankruptcy or

either way it's just bad for credit what

if you file a bankruptcy is going to

create something called an r9 on your

credit bureau if you do something called

a consumer proposal which is oftentimes

more favorably looked upon by all

parties involved where it's a settlement

offer to you headers as an alternative

to going bankrupt it will create an AR 7

on the credit bureau both of those are

bad so that damages the credit you got a

payer bill there is a price to stay out

of trouble that's right sometimes life

throws you lemons and you have to make

some lemonade out of it exactly so but

the answer to the question is how long

does it take to rebuild credit are you

able to rebuild credit with you have a

bankruptcy or a consumer proposal on

your Bureau the answer is yes in the

past years ago banks would not lend you

money as long as you had a credit are

nine and your credit bureau today

because we have a fair large segment of

the population in credit crisis they do

lend money to those people and so by

borrowing money and paying it back you

are affecting your credit score beacon

and even with an AR 7 or an RI on your

bureau there are products that we have

at four pillars that are exclusively to

our clients that we can offer that will

get them started again typically we can

rebuild someone's credit after finding

its consumer proposal within about 24

months we get them back up to about a

650 beacon which is an average beacons

for Wow so that's two years a bankruptcy

stays on your Bureau for six years after

discharge okay but a an AR seven a

consumer proposal will stay on there

three years after date of last payment

so there's still time on the credit

bureau where that derogatory credit

exists but as long as you are able to

build good credit on top of that are

seven or that are nine and the further

down your credit bureau that number gets

in other words you build more and more

good credit layer it on top the last

important it becomes the future lenders

so after about 24 months to 36 months of

having good credit

on top of either that bankruptcy or

consumer proposal excuse me you can you

can generally get to a stage where you

can borrow a conventional rates again

so the average person who maybe just

gets in over their head or doesn't keep

close track of their finances maybe buys

a great vacation on their credit card

and then get back gets back from

holidays and goes oh no how am I going

to pay for this a lot of people get into

that trap and only make their minimum

payments on a credit card how long does

it usually take for people to pay that

off in January of 2011 our federal

government here in Canada actually

legislated the credit card companies to

expose that truth on your credit card

statements so for those viewers who

haven't looked have a look at your

credit card statement I carry one

example in my briefcase when I'm

presenting to clients

someone had 74 hundred dollars worth of

debt on a TD Visa card at a fairly

recent decent interest rate it was 8.75%

but if that client was to make the

minimum monthly payment on seventy four

hundred dollars fifty eight years and

ten months

fifty-eight years ten months

that is crazy well I'm always telling

people that if you're gonna use your

credit card use it wisely I use mine for

everything to get the points and then I

get to go on trips and then I don't have

to pay for my flights or just the taxes

it works out pretty good but the key is

with credit cards you've got a paid in

full every month I don't want to pay a

dime eventer salutely no every once in a

while people do get into a pinch but how

long did you say fifty eight years in

ten years just making your minimum

payment yeah okay I think all of our

viewers need to go look at their credit

card bill and see see if that's true for

them so what makes a debt restructuring

plan successful a debt restructuring

plan to be successful first of all

typically you're filing a consumer

proposal which is the resolution of the

debt so we often settled that between

twenty and twenty five cents on the

dollar relative to the debt that's in

the form of something called a consumer

proposal which is filed through a

bankruptcy trustee a consumer proposal

carries 0% interest so the client can

actually get out of debt because there's

no way the money can go up it can only

go down as they make their payments you

need that you need a budgeting plan

which we offer as well so we don't go

down the same path that we went down

before we get rid of all of the credit

cards of course that's part of the

proposal and then we provide them as

part of our

rebuilding a credit card all you need is

one and as you said pay it off at the

end of each month so keep it simple

right well Chris it has been absolutely

fabulous having you on the show today

best is to not get into debt in the

first place would be very but if you get

in over your head there is help

absolutely thank you Chris

thank you so