Category Archives: baby boomers

Hitched then ditched by marriage ‘predator’

Galina Baron married an elderly man named Charlie Juzumas with a promise he'd never have to go to a nursing home. A judge later said she had "unclean hands" after her son's name was added to the title of Juzumas' house.

Galina Baron, 65, married Charlie Juzumas, 89, with the promise that he’d never have to go to a nursing home. He didn’t know it yet, but he had just become entangled in a predatory marriage.

She promised to be a caring bride who’d keep him out of a nursing home.

When the wedding was done, Galina Baron left her 89-year-old husband at a Toronto subway stop.

Charlie Juzumas took the TTC home, alone. He didn’t know it yet, but he had just become entangled in a predatory marriage.

Juzumas was Baron’s sixth or maybe eighth husband. She had trouble remembering them all, according to a 2012 Ontario Superior Court judgment filed after Juzumas tried to reclaim the house she took from him.

This story is based on Justice Susan Lang’s court judgment, an affidavit and interviews. Baron and her son, Yevgeni, refused to comment.

Juzumas was the husband who got away, but it was a precarious escape.

When Baron married him on Sept. 27, 2007, the 65-year-old bride had been offering caretaking to vulnerable widowers with the expectation of a mention in their will, according to the judgment.

Age was not Juzumas’ weakness. He did yard work, planted flowers and seemed entirely self-sufficient, although he once accepted a tenant’s offer to climb a ladder and remove storm windows. His vulnerability came from a fear of dying in a nursing home.

It’s unclear if Baron knew this when she knocked on his door in 2006. Both were born in Lithuania, 24 years apart. Baron spoke the language of his home country and offered housework.

He was reluctant but she kept coming back. As her visits increased to three times a week, he started to see her as a saviour who’d keep him at home.

Juzumas’ wife, Malvina, died a decade earlier and they had no children, but his memories lived in this house. It was a three-storey Victorian, with stained-glass windows near the west Toronto neighbourhood of Beaconsfield.

Baron pushed for marriage, saying she merely wanted a widow’s pension. She clinched the deal by promising he’d never go to a nursing home.

The day before they married, Baron and Juzumas went to see a lawyer named Stan Mamak in the Roncesvalles neighbourhood. The court judgment detailed Mamak’s actions.

In a recent interview, Mamak said he did his best to independently represent Juzumas’ interests and believed the elderly man was a willing participant. “Just because someone is old doesn’t mean they are infirm,” he said.

Without meeting Juzumas separately to ask his wishes, Mamak wrote a will making Baron the sole executor and beneficiary of his estate, the judgment found.

Baron never did move in, but she spent her daytime visits berating him, according to witness testimony, the judgment said. She got joint access to his bank account. He paid her $800 a month for housekeeping and she took all but $100 of his tenants’ $1,300 monthly rent, said the judgment, which found Baron had “unclean hands.”

According to her affidavit, his new tenant, Pamela Detlor, studied Juzumas’ reaction to Baron. The moment Baron marched through his front door, Juzumas’ shoulders slumped, Detlor said. He was so afraid to speak that she initially thought he was mute. Later, he’d confide his troubles in Detlor saying, “I am a stupid old man,” according to the judgment.

Two years after the wedding, Juzumas realized he’d made a mistake, both in marriage and in the will that gave Baron his estate. He went to a different lawyer who wrote a new will. (The judgment doesn’t say why he didn’t choose Mamak, the original lawyer who wrote the first will of their marriage.) Baron would now inherit $10,000. The rest was bequeathed to his niece in Lithuania. The bulk of his estate came from his home, worth roughly $600,000 in 2009.

Baron soon discovered this act of rebellion. She went to see Mamak. The judgment states that Mamak believed it was Baron who was the victim, a “wronged, vulnerable spouse/caregiver.”

Mamak told the Star that Baron described Juzumas as a violent man, saying she claimed he threatened to cut her in half with a sword.

“In retrospect, I feel she was probably trying to manipulate my image of her — that she was an innocent victim,” Mamak said.

Together, Baron and Mamak came up with the idea to transfer the title of the house to her son, Yevgeni, the judgment found. Mamak said he improved the agreement, letting Juzumas live in the house with his name on title until his death.

A meeting was arranged to add Baron’s son Yevgeni to the house title. That morning, 91-year-old Juzumas ate a bowl of Baron’s soup, becoming “dizzy, as if I’d taken a strong drink,” he later told court.

Tired and disoriented, Juzumas signed the papers, giving away his financial security to a young man he disliked. The judgment later found there was no evidence Mamak spoke to Juzumas without Baron in the room, nor did he tell him the new agreement was “virtually eviscerating” his recent will. (Mamak said he believes he spoke to Juzumas independently but has no notes to prove it.)

When Juzumas learned of Baron’s ruse through a legal followup letter two weeks later, Juzumas’ long-time neighbour, Ferne Sinkins, drove him to the lawyer’s office. Baron arrived a few minutes later, but was told to wait. Juzumas emerged from his meeting with Mamak saying he was told the transfer was “in the computer; it can’t be changed,” the judgment said.

He returned the following week with the same request. Again, Baron appeared — an “unexplained coincidence,” the judge found. (Mamak denied tipping off Baron, saying she was probably following Juzumas.) This time, she demanded a new will and power of attorney over his medical care.

At home, his tenant thought he was “doped up.” His neighbour questioned the large gash on his forehead. Juzumas said he passed out, adding that Baron told him he fell down the stairs. He didn’t want to go to the hospital, fearing he’d be taken to a nursing home. During a rare evening visit, Baron called an ambulance claiming Juzumas was sick. His tenant, Detlor, told the attendants of Baron’s abuse.

Questioned by hospital staff, Baron called Juzumas a violent, pathological liar who should be sent to a nursing home. Instead, staff sent him home where helpful tenant Detlor insisted he change the locks. The day Baron came to get a few possessions left on the porch, Juzumas lay flat on the couch so she couldn’t see him.

Juzumas took his case to court. Baron fought back. The judge gave him a divorce and reversed the transfer of his house, blaming it on Baron and Yevgeni’s “undue influence of a vulnerable elder.”

Two years later, Juzumas sold his home for $910,000 and, neighbours said, returned to Lithuania with his niece.

Source: Toronto Star  Investigative News reporter, Published on Sun Apr 17 2016

Galina Baron married an elderly man named Charlie Juzumas with a promise he'd never have to go to a nursing home. A judge later said she had "unclean hands" after her son's name was added to the title of Juzumas' house.

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Should You Pay for Your Child’s College Education?

College degrees lead to higher pay, greater career options, and — research suggests — longer lifespans. But parents with college-bound children may feel trapped by the skyrocketing costs of education, which can also last a lifetime.

If you pony up, you could risking your retirement. If you don’t, you could be risking your kid’s future.

Indeed, the average graduate leaves school with nearly $30,000 in student debt, a sum that will reduce their future retirement savings by more than $300,000, according to a projection by insurance and financial research group Limra.

Likewise, parents’ retirement savings are also getting put on the line because of skyrocketing costs. Nearly a third of parents in a T. Rowe Price study admitted they’ve made the risky choice of tapping their 401(k) plan to save for their kids’ college.

That’s a shortsighted move, said Sean T. Keating, a certified financial planner in Eatontown, New Jersey.

“You can always borrow money for college, but you can’t borrow money for retirement,” Keating said.

What do you do?

Finding compromise is possible if you plan ahead and follow the right order of operations, said Lazetta Rainey Braxton, a CFP and founder of the wealth advisory firm Financial Fountains.

“Middle income parents need to ensure their own financial stability first,” Braxton said. “It’s like putting on your airplane oxygen mask before you put on your children’s.”

Here are three key questions to ask yourself before you decide to open your wallet wide — or slam it shut.

How much can I afford?

One rule of thumb says that to maintain your standard of living, your savings at retirement should be high enough to replace at least 80 percent of your annual income each year, said Keating. Work backward from that assumption to see how much you can actually spare today, he said, also keeping in mind obligations like your mortgage payments and any other debts.

“You have to be aware of what you’d be sacrificing,” said Erika Safran, a CFP and president of Safran Wealth Advisors in New York. “Will you run out of money at age 75? You must also consider medical expenses and where you will live.”

In fact, many older adults end up forced to retire earlier than they expected because of illness or other unforeseen events, said Thomas Murphy, a financial planner in Dallas. So it pays to leave plenty of buffer room as you budget out any contribution to your child’s college funds.

Am I leaving free money on the table?

Make sure you are doing everything you can to free up easy cash, Safran said. Refinancing a mortgage right now could save you hundreds of dollars a month, for example. If you’ve done the math and realize you truly can’t spare much (or any) cash for your kid’s education, don’t just leave your child hanging.

“When you simply say you can’t pay, that can discourage a kid from applying to schools at all, since he or she might not realize you can actually get application fees waived,” Murphy said.

Instead, stay involved in the process and fill out the Free Application for Federal Student Aid — no matter what. Even if your family income is too high for your children to qualify for federal aid, simply having a completed FAFSA gives students the option to apply for merit-based scholarships and other grants a prospective school might offer.

Finally, remember that it doesn’t hurt to exercise a little patience: Consider asking for additional aid before the second semester, since money may have freed up because of first-semester dropouts, Murphy said.

What lesson will my child take away?

Not all high school seniors are academically or emotionally ready for college.

“For some, a year in the working world not only allows them to contribute financially but also gives them a sense of accountability,” Keating said. “It might also make them more reasonable in their choice of schools.”

Joining the military or starting at a community college before transferring to a four-year school are other options that can save money and give your kids extra runway to mature before college, Keating said.

Remember that, for your child, choosing a school is not just a financial or academic decision. “It’s also an emotional decision,” Safran said.

Try to keep an open mind. If your child is excited to start right away at a school on the high end of your price range, you can always make your financial help conditional upon their academic performance.

“You can promise you’ll help them pay back their loans after graduation if they get good enough grades,” Murphy said.

Source: 

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Toronto Homeowners Get $8,500 Richer Every Month, While Condo Owners Get The Shaft

Bicycle Bob/Flickr

Forget working. The real way to accumulate wealth is to buy a single-family house in Toronto, and wait.

OK, that’s bad advice. But given what’s been going in Toronto’s housing market, you can be forgiven for coming to a conclusion like that.

If you own an average single-family home in Toronto, your net worth has been growing by about $8,500 a month over the past year.

According to the latest numbers from the Toronto Real Estate Board, a single-family home in the 416 now averages $1,053,871, up 10.7 per cent from a year ago. Break down that increase by month, and you get around $8,500.

But in yet another sign of the growing gap between condos and houses, Toronto’s condo dwellers aren’t seeing anywhere near that kind of wealth growth.

The average Toronto condo is now worth $418,603, 5.6 per cent more than a year ago. That works out to a wealth gain of $1,925 a month. Condo owners are growing their wealth at less than one-quarter the pace of homeowners. In the 905 region around Toronto, condo owners are adding only $637 per month in wealth.

Condos just aren’t seeing the same rate of appreciation. While standalone homes in Toronto have grown by 34.8 per cent in price over the past three years, condo prices have gone up only 10.9 per cent in that time.

Say hello to the new face of wealth inequality in Toronto, where owning a back yard is a pass to riches, and owning a balcony is a pass to condo fees.

But so what, you may ask. This value is tied up in the home, it’s not like people can live off it.

Well, yes and no. A growing number of Canadians are taking out home equity lines of credit against the value of their house. The higher the house value, the more they can borrow, and some experts are getting worried Canadians have borrowed too much this way.

And there is also the wealth effect: People change their behaviour when they feel richer, generally buying more than they otherwise would.

This effect seems to be strong in Canada right now. It certainly helps to explain whyconsumer spending held up in Canada this year despite all the talk of recession, and why imports to Canada are strong even while exports are flailing.

So the money may be stuck in your home, but its effects on the economy are real.

Here’s a breakdown of how much wealth Toronto-area residents are accumulating per month off their real estate.

Single-family homes in Toronto (416):
$8,491 in wealth per month (avg. price $1,053,871, up 10.7 per cent in a year)

Single-family homes in GTA (905):
$6,404 in wealth per month (avg. price $732,852, up 11.6 per cent)

Condos in Toronto (416):
$1,925 in wealth per month (avg. price $418,603, up 5.6 per cent)

Condos in the GTA (905):
$637 in wealth per month (avg. price $307,295, up 2.2 per cent)

Source:  |  By  Posted: 10/06/2015 12:29 pm EDT

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Retiring with a mortgage? Why you might want to think twice about that

When it comes to opining on seniors carrying debt into retirement, I’ll state upfront my personal bias that anyone with credit-card debt — or even mortgage debt — has no business fantasizing about retirement. To me, it’s simple: if you have debt of any kind, you keep working until it’s all discharged. As I have written elsewhere, I believe the foundation of financial independence is a paid-for home.

That said, I recognize there’s a large segment of the population not fortunate enough to have a paid-for home, corporate pensions or financial assets like RRSPs and TFSAs. I personally know seniors who still rent and have no financial safety net. Some may have to resort to payday loans just to get by until the next month’s government-issued Canada Pension Plan, Old Age Security or Guaranteed Income Supplement cheques arrive.

Doug Hoyes, president of Kitchener-based bankruptcy trustees Hoyes Michalos & Associates Inc., profiles senior debtors every two years in his Joe Debtor study. The data are shocking. He defines seniors as 60 or older, so many are baby boomers either in retirement or on the cusp of it. (The oldest boomers, born in 1946, are now 70, while the youngest boomers, born in 1964, are 52 and presumably still working full-time.)

Senior debtors make up 10 per cent of Hoyes’ 2015 study, up from eight per cent four years ago and owe an average of $69,031 in unsecured debt, higher than any other age group. Nine per cent borrow against their income — often pension income — by resorting to payday loans.

Payday loans are, in my opinion, almost usury — defined as debt instruments charging more than 60 per cent in interest a year. However, because the loans are only a few weeks in length (literally, until the next payday), the lenders can charge up to $21 for every $100 borrowed in Ontario, which if paid over a year would be interest of 546 per cent, Hoyes says.

Fifty three per cent of these senior debtors live alone and often cite illness or injury as a cause of their financial troubles. Among bankrupt seniors, nine per cent had payday loans. In some cases, their adult children are making financial demands and they’re too embarrassed to admit they have few alternative resources.

At the other extreme are the fortunate, wealthy boomers with paid-for homes, large defined-benefit pensions and maxed-out registered and even non-registered (taxable) investments. For them, says Emeritus Retirement Solutions president Doug Dahmer, the biggest expense will be tax, something that must be planned for well in advance. In this case, borrowing may turn out to be tax efficient.

Then there are the rest of us: perhaps with no large company pensions, modest financial assets and a home with only some equity in it, which may be a tempting source of future funds in retirement or semi-retirement.

This middle group is often torn between paying down the mortgage before retiring, or capitalizing on low interest rates to take a chance on building their financial nest eggs in the stock market.

Last July a CIBC poll found that, on average, Canadians expect to be debt free by age 56, although some are indebted well into their sixties. Even in the 45-plus cohort, more than 68 per cent are in debt, including 31 per cent who still have mortgages. In 2013, CIBC found 59 per cent of retirees were in debt.

But this may not be necessarily a bad thing, argues CIBC Wealth tax guru, Jamie Golombek. “There’s no harm in having debt if it’s for an appreciating asset. If you’re in your home for the long term and borrowing at low interest rates, it’s not a big problem. The problem is when you run out of cash flow to service the debt.”

Interest rates are near 60-year lows: posted five-year mortgage rates are under three per cent at most financial institutions (and under four per cent for 10 years). Of course, unless you lock in, there’s no guarantee rates won’t rise to more uncomfortable levels.

In a paper he wrote for CIBC last year (Mortgages or Margaritas), Golombek suggested the zeal to pay down debt could put some people’s retirements at risk. It was written in response to another CIBC poll that found 72 per cent of Canadians prefer debt repayment over saving for retirement. He found that if you can get 6 per cent annual returns in a balanced portfolio of investments, the net benefit was almost double that of paying down debt.

Back in 2012, BMO Financial Group tackled the same issue, noting that rising home prices meant real estate formed a disproportionate amount of couples’ net worths. This tempts some to tap into their home equity in retirement in order to overcome their past failure to save. As boomers become net sellers of homes instead of driving up prices, BMO said home prices could fall by one per cent per year. Downsizing, renting or moving to a small town are all ways to access some of the equity in your home.

Still, Hoyes has seen enough senior debt to argue against taking on more. “Low interest rates are great as long as you can make payments, but what if you lose your job, get sick or divorce? The fact moderate interest rates are only three per cent is irrelevant if there’s no money coming in. When your income becomes fixed, your expenses have to become fixed, but it’s hard: you can’t control the price of gas or car insurance.”

Personally, I like to have enough Findependence that you reach what Dahmer terms the “Work optional” stage. It’s about being in control of your days, Hoyes says, “If you have debt when you retire you are not in control of your day.”

And of course, medical expenses can creep up. It’s not as bad here as in the United States, where medical costs can have catastrophic consequences, but “In Canada medical expenses are insidious,” Hoyes says, “It’s a lesser amount, but creeps away and boomers are more likely to get whacked.”

One option, if available, is to work part-time in retirement. An analysis by Toronto-based ETF Capital Management found that if a retiree earns just $1,000 a month extra in consulting income or a part-time job, a nest egg’s depletion slows dramatically. For couples, if both partners earn that much, the financial picture is rosier still.

This may or may not be “optional” work. BMO found 29 per cent of Canadians expect to delay retirement and work part-time in retirement because of savings shortfalls. For them, BMO says, tapping home equity constitutes “Plan B,” one that 41 per cent of Canadians are considering.

But avoid reverse mortgages, Dahmer counsels. He says it’s more cost efficient to use a secured line of credit against the house. Draw funds only if needed, but set it up while you’re still working and the bank thinks you’re a good credit risk.

Dahmer thinks flexible use of debt through a line of credit is a sound strategy for smoothing spending in peak years, especially if your main income is from registered assets. “You’re far better off paying 2.5 to 3.5 per cent in interest for a few years than forcing yourself from a 33 per cent to 42 per cent marginal tax bracket, not to mention Old Age Security being clawed back.”

The savings can be in the hundreds of thousands: “Retirement is the one time in life that strategic tax planning can make a significant difference. That’s because of the many different places you can source cash flow from, each with its own distinctive tax implications.”

Source : Financial Post Jonathan Chevreau | March 22, 2016 | Last Updated: Mar 23 6:56 AM ET

Jonathan Chevreau is the founder of the Financial Independence Hub 

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What to know about getting a U.S. mortgage

Obtaining financing for a U.S. purchase, such as these condos in North Miami, with a mortgage is more attractive now that the loonie has sunk value. (Janice Pinto/The Globe and Mail)

Although Canadians and Americans share the same continent, live across from one another on the world’s longest undefended border and speak, mainly, the same language, there is one undeniable geographical advantage that the United States possesses in abundance: year-round warm weather locales.

This has led many Canadians to think about buying a property in a U.S. hot spot.

The bad news for those buying now includes the precipitous dive in the loonie compared with the U.S. greenback and a rise in home prices in the United States since the market bottom of 2010-11.

With affordability tilting away from Canadian buyers of U.S. property, it has made the traditional all-cash purchase (the way four-fifths of Canadians have paid in the past) less attractive and made taking out a mortgage to finance a purchase a much more desirable option, says Alain Forget, director of sales and business development with RBC Bank, a subsidiary of the Royal Bank of Canada.

“It is not a great time for Canadians to pay cash for a U.S. home,” says Mr. Forget, who is based in Fort Lauderdale, Fla.

“In the past, many Canadians have used cash to buy their U.S. home. However that means using the equity in your Canadian home, cashing out investments or using your savings. With any of these options you’ll have to exchange your Canadian dollars for U.S. dollars, significantly reducing the cash you have to buy your U.S. home.”

Obtaining financing for a purchase with a mortgage means that buyers are not exchanging weak loonies for expensive greenbacks. Mortgages are also attractive given the low interest-rate environment and a Canadian dollar that will remain weak “at least through 2017.”

For Canadians seeking a mortgage in the United States, there are a number of key differences to consider.

– It takes longer. It can take just a few days to apply for and obtain a mortgage in Canada. In the United States, it might take 45 to 60 days to complete the process.

– More documents are required. Getting a U.S. mortgage requires different documentation than in Canada because of different regulatory requirements. For most U.S. mortgages, more than 10 documents are required compared to less than five in Canada, according to RBC.

– There are more fees. Buyers can expect to pay 3 to 5 per cent in fees because of third-party expenses such as property appraisal, titles and certain insurance requirements.

– Interest is calculated differently. U.S. fixed-rate mortgages are compounded monthly whereas in Canada they can be compounded semi-annually for a fixed-rate mortgage and monthly or at the payment frequency for a variable-rate mortgage.

– Down payments are bigger. A down payment of at least 20 per cent of the value of the home is now the U.S. standard. It can fluctuate, however, based on whether the home is a primary residence, second home or an investment property.

– Amortization is longer. Now extinct in Canada, the 30-year mortgage is alive and well in the United States, with the option of locking in rates over that span, a situation all but unheard of in Canada.

“U.S. mortgage products provide much longer rate terms including up to 30 years at very low rates,” says Miles Zimbaluk, director of business development with Canada to Arizona, an organization that helps Canadians who are visiting or living in the Southwest state.

“In Canada, you can obtain a 25-year term rate but rates are much higher, persuading people to nearly always choose one- to five-year term rates.”

He notes that the Canadian buyers are in the main getting younger, which means that more of them are likely to be seeking mortgages rather than putting down cash for purchases.

“We still see a lot of retiree snowbirds buying in Arizona but we are also seeing a lot of younger buyers,” says the mortgage broker, whose company assists Canadian buyers to get in touch with realtors, mortgage lenders and brokers.

“Many are buying vacation homes younger in life either as an investment to take advantage of the still lower priced U.S. real estate, or because they can use the property today and work remotely and enjoy more time abroad before retirement.”

Calgary-based executive Evelyn Studer, who owns three properties in Phoenix, paid cash in every case, although for her most recent purchase, she was turned down for a U.S. mortgage because it was a rental property. “But I could get a mortgage or home equity line of credit on the one house I will be using” as her residence in that state.

So she obtained a U.S. home equity line of credit, which she used to build a pool and make other improvements to her property.

“That was actually a very simple process and not much different than getting a home equity line of credit here in Canada. They just needed a letter of guarantee from my company regarding my present employment amount and title, my last two years tax returns and some financial information on my assets and liabilities.”

Source: Globe and Mail  PAUL BRENT Special to The Globe and Mail Published Friday, Mar. 18, 2016

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Fixing Your Credit After a Bankruptcy to Apply for a Mortgage

When I first started working with Charlie (not his real name) in 2005, his bankruptcy had just been discharged, meaning his remaining debt was cleared. His credit score was 526, and he didn’t think he had a chance to even get a credit card.

Charlie’s bankruptcy filing was needed after a difficult divorce and a medical emergency. In fact, a a majority of people who seek bankruptcy protection do so after a medical emergency, difficult divorce, job loss; or some combination of the three.

It didn’t take long for him to realize that his financial life was not over. Within a couple of months, he’d gotten more than a dozen credit card and other loan offers. After the discharge of a Chapter 7 bankruptcy, you’re considered an even better risk than someone who still has a mountain of debt because you can’t file for bankruptcy for at least eight years. In reality, you can get a credit card immediately after your bankruptcy discharge.

Many people think, That’s exactly what got me into trouble in the first place, so I’m going to avoid plastic in my life forever. That’s a huge mistake if you want to buy a house. You need to rebuild yourcredit score, and the best way to do that is to show that you can manage credit wisely. A credit card history that shows you can pay your bills on-time every month is one of the best ways to rebuild that history.

With my help, Charlie’s credit score was back to 646 in about 2½ years, which is enough to qualify for an FHA and VA loan even in today’s rough mortgage marketplace. When we checked his score in January 2011 it was back up to 727; now he can qualify for some of the best interest rates.

The key is to work on three pieces of the puzzle at the same time immediately after the bankruptcy: Clean up your credit report, begin rebuilding a positive credit history and start saving. Now that you don’t have credit bills to pay any more, start putting as much of that money aside as you can to save toward the downpayment on your next home. The more money you can put down, the better you will look to a mortgage banker.

Fix Your Credit Report

The last thing you probably want to do after a bankruptcy is to review your credit report and see all the damage that you did. Get over it. The quicker you clean up that report, the faster you will be able to improve your credit score. You can get a credit report for free from each of the credit reporting agencies at AnnualCreditReport.com. By federal law you are entitled to one free report each year.

When you get that report, review it and note any errors you see on the report. For example, you may find accounts that are not yours or lenders who reported late payments that are not accurate. The credit reporting agency will send you instructions about how to make corrections. Follow those instructions carefully and make your corrections. Send any proof you have that the account reported is incorrect. The credit reporting agencies tend to believe your creditors rather than you, so the more proof you can send the better.

In addition to making corrections, also inform the credit reporting agency of your bankruptcy and note any accounts on that report that were discharged by the bankruptcy. The credit report agency will then note the bankruptcy, and that will start the clock for the debt to be removed from your credit history. Most negative credit accounts can stay on your report for seven years from the last date of activity. A Chapter 7 bankruptcy stays on your credit report for ten years.

But as a negative mark ages on your credit report its impact on your credit score becomes less and less significant, which is why you can rebuild your credit score even before the bankruptcy drops off.

You may find that you have to go through the correction process several times. Each time the credit reporting agency fixes a report, they will send you a corrected copy. Check it again for any errors and report any remaining errors until your credit report is accurate and all your discharged accounts are noted.

Rebuild Your Credit History

While you’re working with the credit reporting agencies to clean up your credit report, you should also be working on rebuilding your credit history by opening one or two credit accounts to begin positive reporting on your credit report. Each time you pay a bill on time that will be a positive mark and will help to minimize the negative marks.

You’ll likely have to start with a secured credit card. These cards usually require an annual fee and charge higher interest rates. While they’re not the best deal out there, they may be your only choice right after a bankruptcy. After about six to 12 months of using a secured credit card on time, you should be able to get an unsecured card with better terms.

You also may be able to get a retail credit card. Don’t go overboard with getting new credit now that you can. Stick to one or two credit accounts to show you can use credit wisely and pay it on time.

Monitor Your Credit Score

As you’re rebuilding your credit score, you may want to monitor your progress. If your score continues to go up, you’re on the right track. But if you find that your score goes down in any quarter, think about your credit activities. Did you charge a large item? Did you open a new account? That way you’ll learn what does positively and negatively impact your credit score so you can be sure you have the best score before applying for that mortgage in the future.

Six months before applying for a mortgage, don’t take on any new debt and risk ruining all the work you did to rebuild your credit score. Keep your credit accounts active but your balances low to get the best credit score.

Source: AOL Real Estate – Lita Epstein Mar 4th 2011 

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What do you do when your parents are living in poverty — in a million-dollar home

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A million-dollar home but a property in a state of neglect and a bare-bones lifestyle that doesn’t fit your wealth.

In today’s housing market where the average price detached home is now $1 million in Toronto and $1.8 million in Vancouver, it’s becoming increasingly common to see seniors living in poverty even though they have enough home equity to lift themselves out of it. Across the country, the average price of a home reached a record $442,857 in 2015 — much of that wealth an untapped resource.

“I’ve seen people who are eating cat food but they own a $1.5 million home,” says David Batori, the broker of record with Toronto-based Re/Max Hallmark Batori Group Inc.”Some of these seniors just don’t have any idea what their home is worth because they bought it so many years ago. Maybe even for as little as a few thousand dollars.”

With some local bidding wars making national news for the high prices homes are attracting, it may seem hard to believe that residents of Canada’s two largest markets don’t know what their homes are worth. But it’s not uncommon for some Canadian seniors to be unaware of the value of their location — a situation that causes many adult children to step in and do something about the imbalance.

Wayne Korol says his 76-year-old mother, who had been diagnosed with dementia, was facing some difficult financial decisions but had the luxury of living in the same home for past 38 years in West Vancouver — an area where prices have soared to an average of about $2.5 million.

“She had credit lines and was living off of them, but the rules changed and she couldn’t (get more credit),” said Korol, whose mother needs care 24 hours a day. “She could have moved, but mom had always said she wanted to stay in her home as long as she could. She loves her property, lives and breathes it. There is a beautiful view of Vancouver from every window.”

Some of these seniors just don’t have any idea what their home is worth because they bought it so many years ago. Maybe even for as little as a few thousand dollars.

He became what is called the committee of person for his mother, essentially, a person appointed to make personal, medical, legal or financial decisions for someone who is mentally incapable of making those decisions for themself. It was something the two had discussed long before she became ill.

“The beauty is mom is where she wants to be and we are able to support her with own resources, so the burden on the rest of us is not as great. She’s really happy,” said Korol, who set up a reverse mortgage on the property for extra cash while retaining the right for his mother to stay in the house.

Korol obtained that mortgage through HomEquity Bank, the largest provider of reverse mortgages in the country.

The Financial Post asked Yvonne Ziomecki, senior vice-president of HomEquity, about what can be done to strike a balance between property wealth and an improved lifestyle.

Q Why is the financial health of parents any business of their adult children?

A I think it’s important because children do have emotional and financial obligations when it comes to their parents. It will depend on family circumstances and some families are comfortable discussing money under any circumstances.

Q What level of involvement should there be?

A If the parents are capable of managing their finances and they seem to be okay, you don’t need to be very involved at all.

Q How do you make that call of when to get involved?

A If you are starting to see some signs, like showing up at the house and seeing disrepair, unpaid bills in unopened envelopes or other neglect. If they used to give money to grandchildren and then all of a sudden it stops — are they forgetting or do they not have any money? It doesn’t have to do with age. You need to stay close to parents geographically.

Q What do you do if you live in another city?

A My parents live in a different country altogether but I have a younger sister and we sort of tag team the conversations (with our parents). I try to talk to them on the phone. You can be close to your parents even if you are not in the same location by spending time on the phone. Sometimes you can pick things up in their voice long distance you can’t pick up in person. (But) it’s not as easy as dropping by and seeing a stack of unpaid bills.

Q Is the issue usually a lack of money or just forgetfulness when it comes to neglecting issues like home repair and bills?

A I think people are afraid to talk about money. It starts with small money issues and they think they can manage and it becomes worse and worse and they are embarrassed to tell their children that maybe they mismanaged something.

Q How often do adult children have to help their parents?

A It happens quite a bit that they are the ones who end up going to the bank for loan. If the parents actually own the house, they can get a reverse mortgage, draw money from the house and lift that burden from their children. We recently had two sons who were drawing $3,000 per month for the medical needs of their parents. They wanted an increase. Their banker said ‘Why? Mom lives in a $1-million-plus home, just use a product to access that (wealth).’

Q What about getting legal control of your parents’ assets?

A I personally preach it’s never too early to get a power of attorney for medical and financial matters. Don’t do one of those do-it-at-home, go see a lawyer. It’s not that expensive. It can cost $200.

Q Is there resistance from parents to setting up a power of attorney?

A It may just be a generation thing or (parents) trust children will just work things out. But it’s not that simple. Money is often a big cause of family feuds and falling out in the family. Even if the parents only have two children and it should be straight forward, it’s not always the case. This has to be done when you still have your mental health.

Q How do you make sure your children don’t financially abuse you and protect yourself?

A Absolutely we see adult children financially abuse their parents, we see that. They add themselves to titles, they take money, loans against the home. There are government agencies you can complain to. But how do you protect yourself in advance? You have to have a broad network of friends and family members you are in contact with. If you are depending on just one person, that relationship could become abusive.

Q What about the relationship between elderly parents or partners? Are they always in agreement?

A The first issue is, is there clarity about finances between spouses. If there is, then it’s easier to be open and involve their children. If they are hiding things — spending habits, savings or other relationships — they are not going to want children to be involved. They don’t want anyone to see what’s going on.

Q Is there a good time of the year to discuss any of this?

A Tax time. It’s a very good time because you can ask if they have all their documents. Do they need any help? Do you want me come over one day and sort through it. Then you can discuss if they are overwhelmed or confused about everything (financially).

Source: Financial Post Garry Marr | March 1, 2016 

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