Credit Disbursement And Collection Flashcards
What are the 5 C’s of creditworthiness
Capacity Credit Character Capital Collateral
What does capacity access
Ability to repay debt, current income and likelihood to continue
How long is considered job stability
Minimum 3 years with same employer
3 main credit bureaus
Equifax
Trans union
Experian
Info credit bureau reports. 5
Personal information Credit bureau score Inquiries Public information Trade lines
Important info in personal info section of credit bureau report
Time at address
What is credit score range
300 - 900
Average credit score
650
Score if client has no credit history
O
Score required to get mortgage from schedule l bank
Over 600
What info is in public info section of credit bureau
Details of collection,bankruptcy
What is in trade lines report section of credit bureau report
History of how client managed past credit dealings
How to calculate total debt to service ratio
(Monthly debt / monthly income) x 100
What TDS ratio is wanted
Less than 40%
What GDS do you want
Under 32%
What does the GDS include
Only house expenses, 50% condo
A client that’s deemed insolvent can consult 3 sources for managing debt
Lender
Credit counselling
Licensed trustee
How would a licensed trustee help an insolvent client
They administer bankruptcy - they are licensed by superintendent of bankruptcy
- provide advice on repayment
- ensure rights of client and lender are respected
- if filed for bankruptcy, must work with one
If client and lender can not work together on insolvency. What are 3 options
Debt management program
Consumer proposal
Bankruptcy
What is a debt management program
- Consolidates debt
- Through credit counselling, and may be free through a non profit
- monthly payments through agency
- may negotiate lower interest
- all payments must be made and in full
- shows on credit score for 3 years R7
What does it mean to work with a consumer proposal for insolvency
- licensed insolvency trustee
- alternative to bankruptcy
- less than $250k (not including mortgage) - repay over up to 5 years
- if creditors reject proposal, then bankruptcy
- remains on credit record for 3 years R7
What is bankruptcy
Legal process that halts all proceedings by creditors to collect debts
How long does bankruptcy stay on record
6 - 7 years
Debt not discharged by bankruptcy
- secured debt
- student loan less than 10 years
- outstanding child and spouse support
- court ordered payments I.e. fines
- government overpayments
