Media reports that Canadians are carrying a record amount of debt, but when is it time to seek the advice of a professional? Take the financial quiz below to test your financial knowledge and to see if you should be seeking debt relief solutions.

  1. What is the annual interest rate on the average payday loan?
    1. 29%
    2. 40%
    3. 100%
    4. 546%

Answer is d) 546%.

Always consider the annual interest rate of borrowing an amount from a pay day loan business.  The initial offer may sound like a good deal, but if you continue to borrow the annual interest rate can be a ludicrous amount. If you find yourself in the never-ending cycle of payday loans it may be a sign of financial difficulty.  Contact a Licensed Insolvency Trustee to understand your options.

  1. What is the threshold between a good and bad credit score?
    1. 500
    2. 580
    3. 640
    4. 720

Answer is c) 640.

A score below 640 is poor.  Your creditors must have reported numerous late payments and it will be difficult for you to obtain additional financing at a reasonable interest rate.  If you have a score below 640 consider speaking to a Licensed Insolvency Trustee about your financial situation.

  1. How long will a late payment be reported on your credit report even if you eventually paid the debt in full?
    1. Less than a year
    2. 1 to 3 years
    3. 4 to 5 years
    4. 6 to 7 years

Answer is d) 6 to 7 years.

Always contact your credit provider to make alternate arrangements for payment to avoid late payments being reported on your credit bureau.

  1. What are the early warning signs of personal insolvency?
    1. Your wages are being garnished
    2. You are borrowing from one credit card to make the minimum payment on another debt
    3. You pay only the minimum monthly payments on credit cards
    4. All of the above

Answer is d) all of the above.

These are all signs that you are struggling to pay your debt in full and should speak to a Licensed Insolvency Trustee about your options.

  1. What assets are lost in a bankruptcy?
    1. Registered Pension Plan
    2. Leased vehicle with no equity
    3. RESP
    4. Household furnishings

Answer is c) RESP

An RESP is not exempt from realization in a bankruptcy and the trustee would have to realize on the contribution and growth portion. Registered Pension Plans, a leased vehicle with no equity and household furnishings worth less than a prescribed amount can all be kept by you in a bankruptcy.

  1. What is the average non-mortgage debt of an individual who files personal bankruptcy?
    1. $18,500
    2. $20,000
    3. $22,595
    4. $24,900

Answer is c) $22,595

Although the above represents an average, we have filed bankruptcies for debtors that owe as little as $5,000.  Bankruptcy legislation is there to provide relief to an honest but unfortunate debtor and everyone’s financial situation and necessity for relief is different.

  1. When is the best time to speak to a Licensed Insolvency Trustee?
    1. When you cannot make your payments when they fall due
    2. When you cannot qualify for financing from a major financial institution
    3. When your credit score is below 640
    4. All of the above

Answer is d) all of the above.

It’s time to call Taylor Leibow Inc. and seek professional advice.

If you find yourself struggling with your debt load, Taylor Leibow Inc. provides a free initial assessment to review your financial situation in detail and explore solutions.  Call us today.

By Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)