Winnipeg Free Press Newspaper Archives Apr 25 2015, Page 49

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Winnipeg Free Press (Newspaper) - April 25, 2015, Winnipeg, Manitoba C M Y K PAGE B11 TAKE THE HASSLE OUT OF YOUR LIFE Receive a complimentary Thërmea Thermal Experience with the purchase of any 2015 Chevrolet Cruze or Equinox from Murray Chevrolet! Be entered to win a grand prize draw Thërmea Spa Experience for two. Plu s Visit us online for details at murraychevrolet. ca Not Your Base Model, Comes Loaded With: • 10 Air Bags • Back Up Camera • Remote Start • Bluetooth • Built- in 4G LTE WiFi • OnStar 2015 CRUZE 1LT LEASE FOR ONLY $ 119 B/ W 0% for 84 Months Available LEASE FOR ONLY $ 188 B/ W 2015 EQUINOX 1LT FWD 0% for 72 Months Available ( 1.5% for 60 Months ) y Not Your Base Model, Comes Loaded With: • Heated Seats • Back Up Camera • Remote Start • Bluetooth • Built- in 4G LTE WiFi • OnStar 39 MPG 45 MPG Special Order 200 to Choose From! Canadian Built! Special GM Shipment 300 to Choose From! ( 1.9% at 60 Months ) CALL OUR SALES HOTLINE TODAY! 1- 888- 714- 9110 murraychevrolet. ca | 1700 WAVERLEY STREET, WAVERLEY AUTOMALL AT BISHOP GRANDIN Example cost of borrowing: $ 12,000 @ 3.99% over 60 months = cost of borrowing $ 1,256.17. All prices and payments are plus taxes and fees. Vehicles may not be exactly as shown. ALL PRICES INCLUDE FREIGHT. JUST ADD THE TAX. ASK ABOUT ADDITIONAL DISCOUNTS FOR CUSTOMER LOYALTY, MILITARY, NEW TO CANADA & STUDENTS! Dealer Permit # 84271 MONEY MATTERS BUSINESS EDITOR: SHANE MINKIN 204- 697- 7308 I BUSINESS. DESK@ FREEPRESS. MB. CA I WINNIPEGFREEPRESS. COM SATURDAY, APRIL 25, 2015 B 11 D IVORCE is putting Burt through the ringer — for the second time around. After his first, he had to file for bankruptcy. Now he’s living in a basement suite ( his ex has the house) with more than $ 38,000 in mostly credit card debt in the midst of negotiating his second divorce. And again bankruptcy looms. “ I’m trying to do the best I can,” says Burt, in his early 50s and self- employed. Earning about $ 25,000, he cuts costs where he can and has managed to pay more than the minimum on his debt, even reducing some credit card balances substantially in the last year. But the father of two school- age children lives close to the edge and worries about the future. Moreover, he still pays child support from his first marriage and now pays child support from the second relationship. On top of that, he’s paying daycare bills. With no pension or savings, Burt is looking for a light at the end of the tunnel. He certainly doesn’t have high expectations. His goal is simple: get out of debt. “ Eventually, I’d like to have enough to afford a better place to live for my kids.” Sandra Fry, a counsellor with Credit Counselling Society in Winnipeg, says Burt does not earn enough income to cover his daily living costs. “ The underlying cause of his issues is cash flow,” she says. “ His current income is not enough to support his expenses, let alone debt repayment.” Burt takes home about $ 1,800 a month. But his monthly expenses without debt payments are more than $ 2,500. So making the minimum payment on the credit cards every month — about $ 800 — is really a case of one step forward and two steps back. The most obvious way out is an equitable divorce settlement, which is still in the process of being worked out, that would see him get a fair share of the equity in their home. Purchased for about $ 172,000 a few years ago, the estimated value today is about $ 250,000, and the mortgage is worth about $ 138,000. After subtracting a home equity line of credit used for home improvements, the remaining equity is about $ 90,000. Fry says Burt should be entitled to 50 per cent of this value, so if his ex- wife wants to keep the house, she has to buy him out. This outcome alone should give Burt enough money to eliminate his debt and possibly have some left for other expenses. Helping matters, Burt should be able to find places to cut costs in his monthly budget. For one, he may be able to eliminate paying child support for his second marriage because he is currently paying for daycare, which is more than what he would be required to pay in child support based on his income. “ So he should not be paying both,” Fry says. Furthermore, the largest debt — more than $ 10,000 — is on a vehicle his ex- wife owns. If she wants to keep it, she should pay for it instead of him paying about $ 120 a month. “ If not, then he should stop paying the debt and let it be repossessed, which is in keeping with the ( collection- practices legislation) in Manitoba.” Yet even with this debt out of the equation, Burt faces a bleak financial future unless he receives his share of the equity in the home because he has very little room to negotiate the interest costs on his debt. “ In order for him to get help negotiating with creditors and have the interest costs reduced, which is what we do here at Credit Counselling Society, we would need to prove to his creditors that the payment is affordable,” she says. So the question is whether he has enough in his budget to support the necessities of life and pay back what he owes. Right now, he doesn’t. “ He is not making enough to afford to eat, sleep indoors let alone repay his debts,” she says. “ He would need to increase his income before we could help negotiate repayment terms with his creditors.” To make a debt repayment plan work, he would have to be able to afford a $ 550- a- month payment to his creditors for 55 months. “ This would save him thousands in interest, but his creditors would not agree to our program if he cannot prove the income to support it.” This leaves him with one other viable option: bankruptcy. And it’s a pretty unsavoury one because he still has assets — albeit ones entangled in divorce proceedings. If Burt gets 50 per cent of the equity in the home, all of that money would be used in the bankruptcy repayment plan. And because it’s his second time filing, he’d face 14 years without access to credit. Needless to say, Burt’s best option is negotiating terms in the divorce that see him get his fair share of the equity in the home so he can pay his debts in full without filing for bankruptcy. That said, he still must improve his financial well- being in other areas. This means balancing his budget by reducing costs while increasing his income. More than anything, Fry says, Burt needs someone in his corner to provide unbiased financial advice that will not result in another bill, and getting help from an organization such as Credit Counselling Society or Community Financial Counselling Services — both non- profits that don’t charge clients fees — is probably a prudent step. “ The best thing would be for him to have an appointment with one of our credit counsellors at Credit Counselling Society to verify all his information and make sure the aforementioned solutions are truly his best options.” joelschles@ gmail. com Divorce and debt Single dad is weighed down by credit card bills from past relationship JOEL SCHLESINGER Burt’s finances ¥ FINANCES Income: $ 25,500 ($ 1,800 a month net) Monthly expenses: $ 2,578 ( excludes debt payments) ¥ DEBTS Mortgage: $ 138,860 at 3.5 per cent Line of credit: $ 17,000 at 8.9 per cent Vehicle loan: $ 11,900 at 7.99 per cent Credit cards: $ 26,035 at 19.99 per cent ¥ ASSETS Home: $ 250,000 Vehicle: $ 10,000 ¥ NET WORTH: $ 66,205 MONEY MAKEOVER Got a financial problem you want solved? Email business@ freepress. mb. ca for a free Money Makeover B_ 11_ Apr- 25- 15_ FP_ 01. indd B11 4/ 24/ 15 3: 59: 16 PM

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