Proof of funds question

[wickerman]

Hi Everyone

I have a question regarding proof of funds.

Do I need to include my credit card statements too?

I am planning to just submit my bank statements, and I have sufficient funds.

However, if I include credit card debt, then I wont have enough (bank balance - credit card debt). So am unsure about what to do. Could you please help out.

 

[thourb]

From IRCC Website (emphasis mine):

Proof of Funds

Purpose
To confirm whether the applicant meets the low-income cut-off (LICO), assessed by the amount of money they hold compared to the number of people in their family

Document requirements

• The applicant should provide an official letter(s) from one or more financial institutions that lists all current bank and investment accounts as well as outstanding debts, such as credit card debts and loans.
  • o The letter(s) must be printed on the letterhead of the financial institution and must include the applicant’s name, the contact information of the financial institution (address, telephone number and email address), the account numbers, the date each account was opened and the current balance of each account as well as the average balance for the past six months.
• Other documents may also be requested, as necessary.

I have seen advice on here both saying that you do need to declare your debts and also advice saying you do not have to disclose your debts. The language above, however, to me seems pretty unambiguous. You MUST declare all of your debts - including credit cards. Failure to do so may lead to your application being rejected under misrepresentation and you getting a 5 year ban from Canada.

That being said - As far as I can gather, IRCC are not interested in your net worth - i.e. your total funds in your bank minus any debts. They are concerned that you may have borrowed money either using credit cards or loans to show POF. You need to show your outstanding debts to prove that you haven't borrowed money to show POF.

The requirement is also that the funds must be available and transferable and unencumbered by debts or other obligations. The funds are required to ensure that you have sufficient resources to settle in Canada without a job. So long as your debts are structured so as to not wipe out your savings within that period, there should be no issue. If your debts that fall due within say 6 months to a year of your landing (i.e. repayments on loans, minimum payments on credit cards) are going to bring you below the threshold then you would likely be refused on grounds that you don't have sufficient settlement funds. On the other hand, if that isn't the case, I don't see why they would reject you as such debts would normally be considered to be paid off with future employment income.

There isn't any authoratitive source on this, I'm afraid - I am in a similar position to you and this is the best that I can come up with based on internet advice and what seems sensible given what IRCC are trying to achieve by having you declare POF. Some members will say that IRCC doesn't care about your credit cards - I can say for sure that they will care if they find out that you have credit card debts as the instructions are very clear. You may have no problems as they may not find out about them if you don't declare, but you're taking a risk by doing this. Rather save up for a few more months and pay your debts off rather than get rejected under misrepresentation and have to curse your decision to keep your debts quiet for the next five years!

I would really appreciate if someone from IRCC would define exactly what "unencumbered funds" are -- are they literally talking about assets minus liabilities or do they take into account the fact that most debts are not immediately repayable?

 

[wickerman]

From IRCC Website (emphasis mine):

Proof of Funds

Purpose
To confirm whether the applicant meets the low-income cut-off (LICO), assessed by the amount of money they hold compared to the number of people in their family

Document requirements

• The applicant should provide an official letter(s) from one or more financial institutions that lists all current bank and investment accounts as well as outstanding debts, such as credit card debts and loans.
  • o The letter(s) must be printed on the letterhead of the financial institution and must include the applicant’s name, the contact information of the financial institution (address, telephone number and email address), the account numbers, the date each account was opened and the current balance of each account as well as the average balance for the past six months.
• Other documents may also be requested, as necessary.

I have seen advice on here both saying that you do need to declare your debts and also advice saying you do not have to disclose your debts. The language above, however, to me seems pretty unambiguous. You MUST declare all of your debts - including credit cards. Failure to do so may lead to your application being rejected under misrepresentation and you getting a 5 year ban from Canada.

That being said - As far as I can gather, IRCC are not interested in your net worth - i.e. your total funds in your bank minus any debts. They are concerned that you may have borrowed money either using credit cards or loans to show POF. You need to show your outstanding debts to prove that you haven't borrowed money to show POF.

The requirement is also that the funds must be available and transferable and unencumbered by debts or other obligations. The funds are required to ensure that you have sufficient resources to settle in Canada without a job. So long as your debts are structured so as to not wipe out your savings within that period, there should be no issue. If your debts that fall due within say 6 months to a year of your landing (i.e. repayments on loans, minimum payments on credit cards) are going to bring you below the threshold then you would likely be refused on grounds that you don't have sufficient settlement funds. On the other hand, if that isn't the case, I don't see why they would reject you as such debts would normally be considered to be paid off with future employment income.

There isn't any authoratitive source on this, I'm afraid - I am in a similar position to you and this is the best that I can come up with based on internet advice and what seems sensible given what IRCC are trying to achieve by having you declare POF. Some members will say that IRCC doesn't care about your credit cards - I can say for sure that they will care if they find out that you have credit card debts as the instructions are very clear. You may have no problems as they may not find out about them if you don't declare, but you're taking a risk by doing this. Rather save up for a few more months and pay your debts off rather than get rejected under misrepresentation and have to curse your decision to keep your debts quiet for the next five years!

Hi thourb, Thank you for the reply!

I just had a clarification to make.

So long as your debts are structured so as to not wipe out your savings within that period, there should be no issue

Could you please let me know what this period is?

The reason I am asking is because I plan to pay off my credit card debt within 1.5 to 2 years. However if you do the math (Bank Balance as of today (not considering future salary)- (min payment on credit card * 12)), would leave me short. However, this math is not accurate, as I will be employed and therefore my bank balance will never go below what I have today, given I keep making minimum payments.

Based on this, do you think this is going to be an issue? The only reason I am worried is because my credit card debt currently is more than my bank balance. However, I have no issues financially, making payments to close out the debt within 1.5 years or so.

 

[thourb]

If your current credit card debt is more than your bank balance (which for a single person means > $12,300) then you really ought to consider the effect that will have on you when you actually land in Canada. Moving abroad isn't cheap and the minimums required by IRCC are very conservative - you're likely to need a lot more than the minimum and that's without having to worry about debts back home!

I should point out that I am merely guessing at what IRCC's stance would likely be in this scenario - as I said there is no concrete policy in place, which results in uncertainty for applicants such as ourselves. If (and only if) my assumption is correct and they do deal with situations like ours pragmatically, then it seems reasonable to assume that you will need to survive for 6 months including your debt repayments. I estimate this based on the fact that POF requirements are based on 50% of the LICO - which is the minimum amount of money that the Canadian Government says that a family needs to last for a year.

I may be totally incorrect and they may well calculate debts - liabilities and thus calculate your funds as being insufficient, but as there is no clear policy on exactly what constitutes "unencumbered funds" I'm giving you my best educated guess on it based on the reading that I've done. As I've also said there are people on these forums (including those with vast experience far beyond mine) that say you do not need to show credit card debts if you didn't use credit cards to build up your POF. If you apply that logic, I can't see any occasion where you would declare credit card debts and not be rejected out of hand for borrowing money though. Some who have stated that they didn't show their credit card debts etc in their applications were accepted and now have PR - so the choice is yours. The bottom line is though - the instructions are extremely clear and there is no ambiguity on whether you should or shouldn't disclose credit card debts in the instructions. I am of the opinion that I'd rather play safe and declare debts and not risk a ban for misrepresentation - which you may very well end up with if you don't disclose debts and IRCC find out about them. For me, it would only delay my application for 4-6 months - much better than waiting for 5 years!

 

[wickerman]

Well, I am currently in the US. Also I am not going to be moving to Canada anytime soon. The PR application is a safe bet option for me, given the GC process in the US is insanely long. The only reason I am applying right now, is beacuse I do not want to lose too many points due to age. And I want to keep an option open. If I move to Canada it will be with a job and not without (most likely a transfer at my current place of work).
So financially, I will be good in the future.

The only issue I have is how IRCC looks at the debt and the bank balance. IF they are going to subtract credit card debt from the bank balance, that will leave me negative! . But that also doesnt make sense given that I am trying to pay it off with employment income. Hence my question. Given the fact that I have only one account, that I am going to show, it will be clear that I havent borrowed any funds (the average across the last 6 months). Woudnt that be sufficient for POF? This is my confusion. The debt seems to not be useful for IRCC and only seems to increase the risk of being rejected....

 

[thourb]

Well, I am currently in the US. Also I am not going to be moving to Canada anytime soon. The PR application is a safe bet option for me, given the GC process in the US is insanely long. The only reason I am applying right now, is beacuse I do not want to lose too many points due to age. And I want to keep an option open. If I move to Canada it will be with a job and not without (most likely a transfer at my current place of work).
So financially, I will be good in the future.

The only issue I have is how IRCC looks at the debt and the bank balance. IF they are going to subtract credit card debt from the bank balance, that will leave me negative! . But that also doesnt make sense given that I am trying to pay it off with employment income. Hence my question. Given the fact that I have only one account, that I am going to show, it will be clear that I havent borrowed any funds (the average across the last 6 months). Woudnt that be sufficient for POF? This is my confusion. The debt seems to not be useful for IRCC and only seems to increase the risk of being rejected....

If you have a qualifying job offer from Canada then you are exempt from providing Proof of Funds. The fact is, however, that right now you don't have a job in Canada. It may be your intent to reside in Canada in the future, but as soon as you have PR you can go straight there and Canada wants to ensure that you have enough money to get by. Showing the debt to IRCC is useful to them because they need to know you can afford to live in Canada. If I owe $1000 a month in card an loan debts then it stands to reason that my money is going to run out very quickly - which I would presume would mean rejection on the grounds of POF as I don't have a job in Canada to help me pay for it.

You're right that it increases the risk of being rejected though - it's your choice whether or not to disclose, but as I've said the language seems pretty clear to me and you potentially risk a ban for misrepresentation. If you show bank statements to IRCC for proof of funds in particular and they show a credit card payment going out every month then that's going to bring up some questions as to why you've not declared any credit card debt!

I should also point out - if you're not already aware - PR in Canada isn't actually "permanent" - it only lasts for 5 years and there is a residency obligation which you need to meet to renew your PR or apply for citizenship. If you don't meet the residency obligation then you lose your PR, simple as that. You may want to consider when you actually intend on moving to Canada as if it's not for a few years then you will need to wait otherwise you'll not be able to prove the residency obligation and will just lose your PR.

 

[Arod]

Showing the debt to IRCC is useful to them because they need to know you can afford to live in Canada. If I owe $1000 a month in card an loan debts then it stands to reason that my money is going to run out very quickly - which I would presume would mean rejection on the grounds of POF as I don't have a job in Canada to help me pay for it.

You're right that it increases the risk of being rejected though - it's your choice whether or not to disclose, but as I've said the language seems pretty clear to me and you potentially risk a ban for misrepresentation. If you show bank statements to IRCC for proof of funds in particular and they show a credit card payment going out every month then that's going to bring up some questions as to why you've not declared any credit card debt!

.

Hi Thourb,

Let me get this straight, you are basically saying that even if I have more than the required POF amount, my application would be rejected because I have a home or a car loan?

I have read people saying that a car or home loan shouldn´t affect your POF as long as you have the minimum required amount.

 

[wickerman]

If you have a qualifying job offer from Canada then you are exempt from providing Proof of Funds. The fact is, however, that right now you don't have a job in Canada. It may be your intent to reside in Canada in the future, but as soon as you have PR you can go straight there and Canada wants to ensure that you have enough money to get by. Showing the debt to IRCC is useful to them because they need to know you can afford to live in Canada. If I owe $1000 a month in card an loan debts then it stands to reason that my money is going to run out very quickly - which I would presume would mean rejection on the grounds of POF as I don't have a job in Canada to help me pay for it.

You're right that it increases the risk of being rejected though - it's your choice whether or not to disclose, but as I've said the language seems pretty clear to me and you potentially risk a ban for misrepresentation. If you show bank statements to IRCC for proof of funds in particular and they show a credit card payment going out every month then that's going to bring up some questions as to why you've not declared any credit card debt!

I should also point out - if you're not already aware - PR in Canada isn't actually "permanent" - it only lasts for 5 years and there is a residency obligation which you need to meet to renew your PR or apply for citizenship. If you don't meet the residency obligation then you lose your PR, simple as that. You may want to consider when you actually intend on moving to Canada as if it's not for a few years then you will need to wait otherwise you'll not be able to prove the residency obligation and will just lose your PR.

That makes sense. In that case, I just calculated, I would just need more funds to account for the minimum payments for 12 months over and above the threshold (I am assuming 12 months as the threshold amount is meant for the first few months and obviously not forever), which I think I can save up by September (Since my application deadline is 27th September). Lets see if that works.

Also, yes I understand that the PR is not permanent and there is a residency requirement. But I guess that is 2 years out of 5. I am confident I will move before that.

 

[thourb]

Hi Thourb,

Let me get this straight, you are basically saying that even if I have more than the required POF amount, my application would be rejected because I have a home or a car loan?

I have read people saying that a car or home loan shouldn´t affect your POF as long as you have the minimum required amount.

I suspect that IRCC deal with secured debts such as home or car loans differently. If you are moving abroad it is generally expected that you would sell those assets and be able to pay back the debt. If you defaulted on that debt then you would lose your assets rather than potentially face legal action or bankruptcy - which is a possibility with default on unsecured debt.

The OP is talking about credit card debt which is a totally different ball game as it is unsecured and you won't necessarily have assets to sell off to pay the debt when you move.

With secured debts you should be fine, but I would still declare them anyway as it comes under the same heading as declaring all debts and obligations. Perhaps that is me being extra-safe, but again the language is pretty clear.

 

[thourb]

That makes sense. In that case, I just calculated, I would just need more funds to account for the minimum payments for 12 months over and above the threshold (I am assuming 12 months as the threshold amount is meant for the first few months and obviously not forever)

That is what I intend on doing and will be applying at the end of this month after payday as there will be sufficient money using this calculation by then. Paying off all debts would take perhaps another 4-6 months by which time CRS score may go up or they may change any number of rules which could be to my detriment: hence the reason for wanting to apply now whilst I know my score would guarantee me an ITA.

I will be using LOE to explain to IRCC what debts I have and how I intend on keeping to my obligations without falling below the minimum requirements within the first year in Canada.

 

[wickerman]

That is what I intend on doing and will be applying at the end of this month after payday as there will be sufficient money using this calculation by then. Paying off all debts would take perhaps another 4-6 months by which time CRS score may go up or they may change any number of rules which could be to my detriment: hence the reason for wanting to apply now whilst I know my score would guarantee me an ITA.

I will be using LOE to explain to IRCC what debts I have and how I intend on keeping to my obligations without falling below the minimum requirements within the first year in Canada.

Yes makes sense. If it helps, I am thinking of borrowing some cash from friends and "slipping it in", over the course of 3 months. A deposit of a few hundred dollars at a time, wont raise any concerns in my opinion, but could add up to 1 or 2K by the time you generate the bank statement. If that wont be possible, then I should just borrow cash and use cash and not touch my account.

Also if you are applying only after a month, then you have atleast 4 months minimum to show proof of funds (if you are assuming you will go through the draw immediately). Assuming you can accumulate enough funds, by then, you should be good imo.

 

[thourb]

Yes makes sense. If it helps, I am thinking of borrowing some cash from friends and "slipping it in", over the course of 3 months. A deposit of a few hundred dollars at a time, wont raise any concerns in my opinion, but could add up to 1 or 2K by the time you generate the bank statement. If that wont be possible, then I should just borrow cash and use cash and not touch my account. .

I'd be wary of doing anything like this, it's completely against the rules and won't be condoned by anyone on here. They may not notice but you're taking a risk, I'm sure you're already aware of this.

 

[Arod]

I suspect that IRCC deal with secured debts such as home or car loans differently. If you are moving abroad it is generally expected that you would sell those assets and be able to pay back the debt. If you defaulted on that debt then you would lose your assets rather than potentially face legal action or bankruptcy - which is a possibility with default on unsecured debt.

T

Got it. That´s a relief as I have two current loans (car and home) and rarely use my credit card.

 

[wickerman]

I'd be wary of doing anything like this, it's completely against the rules and won't be condoned by anyone on here. They may not notice but you're taking a risk, I'm sure you're already aware of this.

I am aware. However, I cant think of any other way without raising concerns.

 

[wickerman]

Oh, I had another question.

I realized that I have an FD (Fixed Deposit) set up back home. I transferred the money to my parents back in August last year. And they set up an FD in their name. Can this be used as proof of funds?