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MEFA Student Loans Review: Non-Profit Lender With Low Rates And Fees

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MEFA Student Loans

When you need a private student loan for school, finding a student loan provider who can meet your needs and has reasonable loan terms is critical.

Private student loan providers are not all created equal. So researching providers is a must when it comes to finding a good deal. Looking for lenders that are non-profit organizations can be a good starting point as they may be willing to offer more attractive rates and/or terms.

MEFA is one such non-profit provider. For undergraduate and graduate students who are United States citizens and attend an eligible college, MEFA student loans could be a strong option. We’ll explain the loan features and when a private student loan from MEFA could make sense.

See how MEFA compares to other private lenders in minutes on Credible!


MEFA logoMEFA logoMEFA logo

Quick Summary

  • Undergraduate and graduate student loans
  • Reasonable rates and terms
  • No formal forbearance policy

MEFA Student Loans Details

Product Name

MEFA Student Loans

Min Loan Amount

$1,500

Max Loan Amount

Cost of Attendance

APR

3.75%-5.75%

Rate Type

Fixed

Loan Terms

10 or 15 Years

Promotions

None

Who Is MEFA?

MEFA is the Massachusetts Educational Financing Authority. They are a non-profit organization based in Boston, MA. MEFA provides student loans for undergraduate and graduate students alike. MEFA was created in 1982 by the Massachusetts state legislature at the request of colleges and universities across the state.

What Do They Offer?

MEFA offers private student loans to undergraduate and graduate students. They also provide student loan refinancing. While MEFA is a Massachusetts-based organization, they lend to families in all 50 states.

A MEFA loan only covers one school year. Students must apply each year that they will be in school. For example, if you want a loan to cover four years of school, you’ll need to apply four times for four loans.

Students can borrow up to the cost of attendance minus any financial aid. Minimum loan amounts are $2,000 for private schools and $1,500 for public schools. Cosigners are generally required for undergraduate loans.

Qualifications

Students must be enrolled at least half time in an accredited degree-granting undergraduate or graduate program and maintain satisfactory academic progress as outlined by the school. The school must be a non-profit but can be public or private. Loan applications are subject to MEFA credit approval standards.

To find out your actual loan rates, you’ll have to go through the full application process, which does require a hard credit check. If you are using a cosigner, they will also require a credit check and the final loan amount can depend on the cosigner’s finances. Upon approval, any loan rate that you might receive will fall within the ranges stated below for undergraduate and graduate loans.

Undergraduate Loans

There are several types of student loans for undergraduates to choose from. Fixed rates vary from 3.75% to 5.75% APR. Note: rates subject to change.

  • Immediate Repayment (10-year term): Payments begin immediately (28th day of the month following the final disbursement). 3.75% - 5.30% APR
  • Immediate Repayment (15-year term): Payments begin the same as above. 3.95% - 5.35% APR.
  • Interest-Only Repayment (15-year term): Interest-only payments begin immediately. Payments that include principal begin after the undergraduate anticipated in-school period. 4.25% - 5.40% APR.
  • Deferred Repayment (15-year term): Payments are deferred until six months after the student graduates or no longer meet academic qualifications. Deferments are available for a maximum of 60 months. 4.38% - 5.50% APR. 
  • Student Deferred Repayment with Co-Borrower Release (15-year term): Same terms as “Deferred Repayment.” However, the co-borrower can be released after 48 consecutive on-time payments. 4.62% - 5.75% APR.

Graduate Loans

There are two types of graduate student loans available from MEFA. Both have fixed rates. The same loan minimum and maximum amounts apply for graduate as undergraduate loans.

  • Interest-Only Repayment (15-year term): Payments begin the 28th day following the final loan disbursement. The principal will be added to loan payments once the in-school period ends. 4.25% - 5.40% APR.
  • Deferred Repayment (15-year term): Payments are deferred until six months after the student graduates or no longer meet academic qualifications. Unlike undergraduate loans, deferments on graduate loans max out at 36 months. 4.45% - 5.50% APR.

Are There Any Fees?

MEFA student loans (for both undergrads and graduates) come with no application or origination fees. They also don’t charge fees for late payments or returned checks. Finally, there are no prepayment penalties on MEFA student loans.

How Do I Open An Account?

To apply for a MEFA loan, visit https://www.mefa.org. Keep in mind that MEFA doesn’t offer pre-qualified rate quotes. If you submit a loan application, a hard credit inquiry will be placed on your credit report.

Is My Money Safe?

Since MEFA doesn’t take deposits, there isn’t any money to lose. If you’re approved for a MEFA student loan, the funds will be disbursed directly to your college or university.

Is It Worth It?

For students who need to take out private student loans to help pay for school, MEFA student loans could be worth it. They have competitive rates and terms and do offer some in-school deferment options.

However, one major downside to MEFA is that they don’t have any formal hardship forbearance policy. And since they use traditional loan underwriting methods, it’s likely that you’ll need a cosigner to get approved for a MEFA undergraduate student loan (and only one of their loans offers cosigner release).

Before you apply for any MEFA student loans, be sure to compare them with other private lenders on Credible. And if you’re looking to take out a private student loan without a cosigner, check out our guide.

MEFA Student Loans Features

Min Loan Amount

  • Public school: $1,500
  • Private school: $2,000

Max Loan Amount

Cost of attendance

APR

3.75%-5.75%

Auto-Pay Discount

None

Rate Type

Fixed

Loan Terms

10 or 15 years

Origination Fees

None

Prepayment Penalty?

No

In-School Payments

  • Immediate payments
  • Interest-only payments
  • Full deferment

Co-signers Allowed?

Yes, but only on one undergraduate plan

Grace Period

6 Months

Eligible Schools

Accredited non-profit degree-granting undergraduate or graduate program (public or private)

Servicer

American Education Services

Customer Service Phone Number

1-800-266-0243

Customer Service Hours

Monday-Friday, 8 am - 8pm

Customer Service Email

Address For Sending Payments

American Education Services
P.O. Box 65093
Baltimore, MD 21264-5093

Promotions

None

The post MEFA Student Loans Review: Non-Profit Lender With Low Rates And Fees appeared first on The College Investor.



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Gemini Review: Secure Cryptocurrency Exchange With Advanced Tools

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Finding a cryptocurrency exchange that is secure and has never been hacked can be a tall order.

And if you also prefer for the company to be based in the United State, you might already be thinking about Coinbase. But you might be surprised to learn that Coinbase isn’t the only game in town that meets all of those requirements.

Gemini is a U.S.-based company with FDIC protection for USD and has never been hacked (that we’re aware of as of publication). It’s a straightforward platform that is easy to use and puts security at the highest level. In this article, we’ll do a detailed review of Gemini.


Gemini logo

Quick Summary

  • Cryptocurrency exchange based in the United States
  • Industry-leading security standards
  • 20+ supported digital currencies

Gemini Details

Product Name

Gemini 

Features

Cryptocurrency exchange, digital wallet, and USD Coin marketplace

Supported Currencies

20+

Fees

Convenience Fee: 0.50% above market rate

Transaction fee: $0.99 to 1.49%

Promotions

$10 worth of free Bitcoin (after buying or selling $100)

Who Is Gemini?

Gemini is a cryptocurrency exchange. It was started by the Winklevoss twins (Cameron Winklevoss and Tyler Winklevoss). You might recognize those names. They created ConnectU, which was the predecessor to Facebook.

Gemini was started in 2014 and is based in New York, New York, which means it is one of a few cryptocurrency exchanges that is regulated in the U.S. Specifically, it is regulated by the New York State Department of Financial Services (NYSDFS).

What Do They Offer?

Gemini has over 20 cryptocurrencies, including its own currency called Gemini dollars (GUSD). You can trade and store cryptocurrencies with Gemini.

Through a partnership with Samsung, Gemini powers the Samsung Blockchain. Customers in the U.S. and Canada can connect their Samsung Blockchain Wallet to the Gemini app to trade currencies.

Funding Your Account

You’ll have to fund your account from a bank account. It can’t be funded using a debit or credit card. The maximum daily funding limit is $500 USD and $15,000 USD monthly. The daily withdrawal limit is $100,000 USD.

If you have cryptocurrencies in another off-site wallet and want to fund your Gemini account using those currencies (crypto-to-crypto), you can do that as long as the currencies are BTC, ETH, BCH, LTC, or ZEC. 

Mobile Trading

Like many crypto exchanges, Gemini has a mobile app that you can trade from. You’ll find that it’s easy to use and comparable to the desktop platform. If you want to execute complex trades, it’s probably best to do those on the desktop platform. Complex trades can get a bit tedious on the mobile app.

Gemini Dollar

The Gemini dollar™ is a stablecoin that can be used in all kinds of transactions from spending to lending to investing. Its backed by US dollars held at State Street Bank and Trust Company and offers 1:1 transferability back to US dollars at any time. And Gemini has partnered with BlockFi to offer savings accounts for your Gemini dollars with interest rates of up to 8.6% APY.

Related: These Are The Top Crypto Savings Accounts of 2020

Flexa

Would you rather spend your cryptocurrency directly from your wallet? With Gemini, you can. Through a partnership with Flexa, you can purchase products at participating retailers using cryptocurrencies. Retailers include Nordstrom, GameStop, Whole Foods, and Home Depot. You’re able to spend Gemini dollars (GUSD), Bitcoin, Bitcoin Cash, and Ether.

Nifty Marketplace

The Nifty Marketplace is Gemini’s recently launched platform where you can buy and sell digital art and collectibles. Digital artistic assets can also be stored in the marketplace, which increases trust and security for both the buyer and the seller.

Are There Any Fees?

Yes, Gemini does charge commission rates for trading on its platform. There is a convenience fee of 0.50% above the market rate. To figure out the convenience fee amount, multiply 0.50% (1.005) by the amount of currency you want to buy. 

There is also a flat transaction fee for orders placed via their web or mobile applicaitons. The fee ranges from $0.99 to 1.49% of your order value, as shown in the chart below.

Order Amount

Fee

≤ $10.00

$0.99

> $10.00 but ≤ $25.00

$1.49

> $25.00 but ≤ $50.00

$1.99

> $50.00 but ≤ $200.00

$2.99

> $200.00

1.49% of order value

ActiveTrader fees are more involved. You can view the ActiveTrader fee schedule here.

For people who want to custody (i.e., cold storage) crypto with Gemini, there is a 0.40% charge for customers with assets greater than $1million. There is a $125 administration withdrawal fee as well.

How Do I Open An Account?

The account sign-up process for Gemini is simple and straightforward. You will need to verify your identity using a form of ID. You’ll also need to connect your phone for two-factor authentification.

Finally, you’ll need to fund your account. Gemini uses Plaid to connect with your bank acount or card issuer. Once your application has been accepted and your account has been funded, you can start making trades! Get started with Gemini and earn $10 in free Bitcoin!

Is My Money Safe?

As long as it’s been in operation, Gemini has not been hacked. Like Coinbase, USD stored in your Gemini account is FDIC insured.

Gemini started with a “security-first” mentality. They utilize security and compliance by being compliant in SOC 1 Type 1, SOC 2 Type 1 and Type 2. All of that compliance means you’ll need to be prepared to give up some of your personal information such as email address, bank account details, phone number, and some form of ID when opening an account. 

Is It Worth It?

Gemini is one of the most secure cryptocurrency exchanges out there. Security is its main selling point. It is a U.S. based company and the platform is easy to use.

If your crypto trading is mostly in popular currencies such as Bitcoin, Ethereum, Litecoin, Bitcoin Cash, or Zcash, you’ll probably enjoy using Gemini. For all of those reasons, Gemini is certainly worth checking out as a cryptocurrency platform.

However, before you rush into cryptocurrency investing, keep in mind that digital currencies are often volatile investments and should only receive a small portion of your total investing capital. To start building a diversified stock market portfolio, see our favorite stock brokers of 2020.

Gemini Features

Services

Cryptocurrency exchange, digital wallet, and USD Coin marketplace

Supported Currencies

  • Bitcoin: BTCUSD
  • Ether: ETHUSD
  • Bitcoin Cash: BCHUSD
  • Litecoin: LTCUSD
  • Chainlink: LINKUSD
  • Zcash: ZECUSD
  • Maker: MKRUSD
  • Basic Attention Token: BATUSD
  • DAI: DAIUSD
  • Kyber Network: KNCUSD
  • 0x: ZRXUSD
  • OmiseGo: OMGUSD
  • Orchid:OXTUSD
  • Enjin Coin: ENJUSD
  • Flexacoin: FXCUSD
  • Decentraland: MANAUSD
  • Golem: GNTUSD
  • Numeraire: NMRUSD
  • Storj: STORJUSD
  • Loom: LOOMUSD
  • Bread: BRDUSD
  • Caspian: CSPUSD
  • Filecoin: FILUSD
  • Dogecoin: DOGEUSD

Fees

  • Convenience Fee: 0.50% above market rate
  • Transaction Fee:
    • ≤ $10.00: $0.99
    • > $10.00 but ≤ $25.00: $1.49
    • > $25.00 but ≤ $50.00: $1.99
    • > $50.00 but ≤ $200.00: $2.99
    • > $200.00: 1.49% of order value

Supported Areas

US: All states except Hawaii

International: Canada, Hong Kong, Singapore, South Korea, and the UK

Minimum Deposit

None

Trading Minimums

  • BITCOIN (BTC): 0.00001 BTC
  • ETHER (ETH): 0.001 ETH
  • ZCASH (ZEC): 0.001 ZEC
  • BITCOIN CASH (BCH): 0.001 BCH
  • LITECOIN (LTC): 0.01 LTC
  • ERC-20 TOKENS (OXT, BAT, LINK, or DAI): 1 token
  • Transfer Methods And Fees

    • ACH: Free
    • Wire Transfer: Free
    • Bitcoin, Ether, Litecoin, Bitcoin Cash, Zcash, Chainlink, Orchid, Dai, BAT, ACH, Gemini dollar (Redemption): Free

    Deposit Fees

    • ACH Transfer: Free
    • Wire Transfer: $10 ($25 outgoing)

    Customer Service Phone Number

    1-866-240-5113

    Mobile App Availability

    iOS and Android

    Promotions

    $10 worth of free Bitcoin (with referral link and after buying or selling $100 or more)

    The post Gemini Review: Secure Cryptocurrency Exchange With Advanced Tools appeared first on The College Investor.



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    The Sweet Spot

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    “Success can get you to the top of a beautiful cliff,

    but then propel you right over the edge of it.”

    As a Mustachian, there’s a good chance that you are a bit of an overachiever. 

    Maybe you fought hard to get exceptional grades in school, or perhaps you have always dominated in your career or your Ultramarathon habit or your hobbies - or maybe all of the above. 

    In the big picture, this usually leads to having a “successful” life, because of this basic math:

    Traditional Success
     =
    How much work you do
    x
    How much society happens to value your work

    The Nitty Gritty of Traditional Success

    Now, lest the Internet Privilege Police head straight to Twitter to start writing out citations, Traditional Success is not a measure of your worthiness as a human being. We’re just talking about the old-fashioned, Smiling 1950s Man definition of success.

     And since we’re all scientists here, we could break the “Work” side of it down a bit further:

    And thus, you could say that on average, doing more stuff produces more traditional success. 

    But then what?

    This is the point where a lot of  smart, driven, born-lucky people drive themselves up the Winding Road of Challenge and then right off the edge of the Cliff of Success. 

    If you’re still on the way up, or stuck at the bottom, it is difficult to even imagine the idea of “too much success”. But it’s a real thing, and it happens much more quickly than the modern overachiever would like to admit. Observe the following cautionary tale:

    Diana is the director of engineering in a Silicon Valley tech startup. The work is intense, but they are almost over the hump - the company went public last month, and she owns shares that are worth over $10 million at today’s share price. They will vest over the next five years, so she just needs to grind this out and then she will be set for life.

    Sounds great, right?

    Except this is Diana’s third smashing success. She was already set for life after the second company was acquired, and even before that, her first decade as a rising star at a large company had already left her with over $2 million of investments and a paid-off house in hella expensive Cupertino, California. She had more than enough to retire, twenty years ago!

    To many people who are less fortunate, the present situation would still sound like great fortune, and in some ways, it is. Becoming a Director of Engineering is (usually) far better than a punch in the face.

    But Diana is now 52 years old, with a collection of increasingly severe back and neck problems and a few medical prescriptions piling up. She has two grown children in their twenties, but wishes she had been able to spend more time with them as they grew up. She has all the money in the world, but still almost no free time, and this next five years is starting to look like an eternity.

    What happened here?

    Diana is in good company, because many of our hardest-working people fall into this same trap. They have the talent and the great work habits figured out, but they are still missing one last concept - the idea of the sweet spot.

    Fig. 1: What is the ideal length of a high-end career?

    Diana could have stopped after the first company, or the second, but her career success took on a momentum of its own, so she kept doubling down without stopping to consider why she was doing it - and what she was giving up in exchange.

    Once you learn to see the phenomenon of the sweet spot, you will start noticing it everywhere. And it is an amazingly useful thing to start watching and fine-tuning to get the most out of your own life.

    Fig.2: What is the ideal amount of Anything?

    The Sweet Spot of Physical Training

    When a non-runner starts running, they will see immediate benefits. In the process of going from being unable to jog across a parking lot, to being able to easily jog a brisk mile, your entire body will transform for the better. Muscles and bones get stronger, heart and lungs expand and reach out to give your body a healthy embrace, brain functioning and mood and hormones smooth out and normalize. 

    Training your way up to become a two mile runner still brings great benefits - just slightly smaller. The fifth through twentieth mile turn you into a hyper efficient machine, but some people start seeing joint injuries as they rise through the ranks.

    And by the time you reach the fringe world of 100-mile runners, serious injuries and surgeries are completely normal - as well as unexpected organ failures in otherwise young, healthy people. The sweet spot for daily running for maximum health is somewhere the middle.

    All around us, seemingly unrelated things follow this same pattern, from career work to physical exertion to parenting strategy.

    Fame and Fortune - be careful what you wish for

    Fame definitely has a sweet spot. Building up a good reputation in your community can open the door to better friendships, jobs, relationships, and more fun in general.

    But as that reputation expands outwards to become fame, you get the “reward” of constant coverage in gossip magazines and waking up to find photographers and news reporters on your front lawn. At the extreme end, you need to mobilize a team of armored vehicles and line your route with snipers every time you leave your well-guarded compound.

    Even money, our humble and ever-willing servant is subject to this phenomenon. It certainly helps us meet our basic needs, but there is a certain point at which Mo Money can become Mo Problems. 

    The first bit of monetary surplus can be fun as you can afford a nice house and good food. Then the next chunk seems fun but also causes distractions as you rack up second and third houses and ever-more elaborate possessions and vacations that take a lot of energy to keep track of.

    And from there it goes downhill as tabloids start keeping track of your wealth and scrutinizing your choices, hundreds of people mail in pleas for your generosity, and you end up with a full-time job just making sure that the surplus goes to good use. This life arrangement can still be enjoyable for some people, but I would definitely not wish it upon myself.

    On and on this pattern goes. A curve with a sweet spot in the middle. The optimal amount of calories to consume in a day. The volume at which you will enjoy your music most. The right brightness of light to illuminate a room. The number of friends with whom you can have a meaningful relationship.

     Why does it occur in so many places? I believe it is because this is how our brains are wired in the first place

    Humans are a ridiculously adaptable creature, but we do still come with limits.

    And when you respect those limits and fine-tune your life within the sweet spot for all of the main pillars for happy living, you end up with the best possible chance at living a happy, prosperous life.


    A Mid-Roll Advertisement:

    Interest rates are still at WTF-low levels, so if you haven’t already done so, I recommend checking your current home mortgage and student loan rates. Either at your local credit union, or online via a service like Credible.

    Click Here to open that up in a new tab, and keep reading.

    Note: This is an affiliate link, to learn why I use these even when I am supposedly retired, read this.


    The Curse Of the Overachievers - Revisited

    So now you see the problem - overachievers like us tend to get really good at a few things like a career or an athletic pursuit often specializing so much that we neglect other things like overall health or personal relationships.

    And our society notices and rewards us for the success, which just reinforces the behavior, so we take things to even higher extremes, often without stopping to think about the reason behind it.

    Okay, So What Now?

    Once you see the pattern of the sweet spot,  it is impossible to un-see it. So it becomes pretty easy to float up and look at your entire life from above, like an outside observer.

    And from up there, you can see the areas where you have enough, and places where you may have already gone overboard, and the corresponding things that you have left neglected as the price of that success. 

    Over the past year I’ve been looking at my own life from this perspective, coming up with quite a few of my own diagnoses:

    Money: enough. Additional windfalls don’t seem to bring me any lasting joy, but I also don’t have so much money that it makes me nervous. It’s enough to feel safe and empowered, and that’s all I need. Meanwhile, giving away money has brought me lasting happiness, without creating a feeling of shortage or regret.

    Career Success (blog): It Varies. When I was really working on this MMM job in the mid-2010s, it started to take over too much of my life. Emails, opportunities, travel and public attention all reached levels where I actually started to have less fun. So I tried dialing it back, as any long-term readers will have noticed. And sure enough, life improved. But then I went too far and started feeling a loss from letting this valued hobby slip away. I’ve been trying to get back into the groove, which revealed another problem - detailed at the end of this list.

    Friendships: Not Enough. I have found myself not being able to keep up with close friends, and had difficulty making or keeping plans, partly out of  feeling overwhelmed with life details in general. Still, the opportunities abound here in my local community, and the people are wonderful. So I have the opportunity to keep working at this.

    Health and Fitness: Enough. Since I was about fourteen years old, eating well and getting a lot of varied exercise has always been a kind of non-negotiable pillar for me. Nothing extreme, but just very consistent. I think this has been paying off as I feel healthy every day and have never had any physical or health problems in these 30+ years since.

    Parenting and Kids: Enough (an A+!) Since 2005 I made “being a Dad” my primary goal in life, quitting my career to do so. It’s the only thing I can truly say I have done the best I could at, and I’m really proud of that. But part of this success came from only having one kid - both of us parents knew we couldn’t handle any more, given the overall conditions of life back then. So for us, the sweet spot was One Child - and absolutely no regrets in that department.

    Personal Projects and Daily Habits: Not Enough. I get great satisfaction from working on challenging things and making progress. But far too often, I just can’t get it together and I squander entire days on accidental distractions. Planning to go out for a day of work can lead to searching for lost sunglasses which can lead to finding a lost to-do list which can lead to opening the computer to look something up and several hours disappearing. On and on these tangents can go, often leading to me not getting my primary, happiness-creating goals for the day accomplished. 

    I discovered that I have a pretty severe and textbook case of Adult Attention Deficit Disorder, which gets magnified if there are any sources of stress in my life. So I’m working on that (keeping stress down and also targeting habits, diet, exercise and even trying some medication), which will hopefully improve all other areas of life as well.

    What am I missing? I’m still working on thinking it all through, so this list will surely grow.

    Your Turn

    Your life surely has a completely different array of surpluses, shortages and sweet spots than mine. Your assignment is therefore to write them all out tonight, and see where you stand in each area, and decide what to change. Many of the changes are quite easy to make, and yet the results are nothing short of life-changing.

    In the comments: what are your own areas of surplus and shortage? And what’s your plan to help restore balance to your life?



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    Insolvency filings fall at record pace as consumers, businesses cling to government support

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    Fewer Canadian consumers and businesses filed for insolvency at the height of the pandemic-induced economic shutdown compared to both the first three months of 2020 and the same period a year ago, according to Office of the Superintendent of Bankruptcy (OSB) data released on Wednesday. 

    The number of both consumer and business insolvencies declined by a record amount.

    Consumer insolvencies dropped 42.3 per cent in the second quarter of 2020 compared to the first quarter of the year, and 45.4 per cent from the same period last year, while the number of companies filing proposals or bankruptcies decreased 31.3 per cent compared to the first three months of 2020, and 37.7 per cent from a year ago

    At first glance, the data appear to contradict the general economic climate, which has experienced consecutive months of high unemployment, and surges in both the number of small businesses shutting down and large retailers filing for creditor protection. 

    But experts said the sharp insolvency declines are a combination of businesses and consumers being able to delay the bankruptcy process because of the slew of government income support programs keeping them afloat, and because many courts were closed for months, discouraging people from embarking on the insolvency process altogether. 

    “The pressure is off. The collectors are not collecting as much. The courts are essentially closed. If you’re not working, you can’t have your wages garnished. But let’s be clear, many people still have massive amounts of debt,” said Doug Hoyes, co-founder of Hoyes, Michalos & Associates Inc., one of Canada’s largest personal insolvency firms. 

    “Collection agents hardly ever sue anybody, even though they always threaten to, but at the moment, I think people realize that’s an idle threat.”

    The OSB’s insolvency data track the number of individuals and businesses that file for bankruptcy, or that submit a proposal offering to repay in whole, or in part, the amounts owing to creditors. The data do not track the number of companies that go through the court-driven process of filing for creditor protection or receivership. 

    “I’m calling it ‘The Great Pause,’” said André Bolduc, a licensed insolvency trustee and executive board member of The Canadian Association of Insolvency and Restructuring Professionals. “

    People and businesses are getting a lot of help from the government right now, including mortgage deferrals, so they are just waiting to see how they will fare.”

    Bolduc added that the p

    eople he has spoken to who have thought about filing for insolvency have different priorities right now. For example, many have had their kids at home for months.

    “The only analogy I can think of is March break, or the Christmas holidays, where we also tend to see a dramatic drop in the number of filings,” he said.

    The declining pace of consumer insolvencies seemed to have peaked in May, as the decline in June was significantly lower.

    Hoyes said there has been a notable impact on inquiry volume as people return to work.

    “As the courts and collection agencies open, we expect insolvencies will gradually return to pre-COVID levels in the coming months, and beyond that number as people deal with the impact of payment deferrals and new debt,” he said. 

    Hoyes also believes that the end of the Canada Emergency Response Benefit (CERB) on Sept. 26 could also result in a surge in the number of personal insolvencies as those who might not qualify for employment insurance (but qualified for CERB) struggle to keep up with debt payments. 

    On the business front, the number of insolvencies traditionally has not captured the number of small businesses that shut down altogether instead of going down the bankruptcy route.

    But Hoyes said the spillover effect of the sheer number of small businesses going under — evident from the latest Statistics Canada data that showed almost 90,000 businesses shut their doors in April — could show up in the number of personal insolvency filings. 

    “I have already talked to two or three people in the restaurant industry who are back to work, but not getting the same income. They are calling me to see what they can do about their debt situation,” he said. “If I had to predict, probably by next spring we will see a sharp increase in insolvencies.” 

    Publicly available data from the OSB shows that more than 30 businesses — mainly retailers, cannabis companies and oil and gas firms — since April have been granted protection under the Companies’ Creditors Arrangement Act (CCAA), which allows insolvent companies that owe more than $5 million the ability to restructure their business. 

    That number, said David Lewis, also a CAIRP board member who specializes in corporate insolvencies, is much higher than normal.

    “The government programs did help a lot of businesses, but, unfortunately, many had major structural issues prior to the pandemic,” he said. “You are probably going to see a lot more troubled entities going forward, until things go back to normal.” 

     



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