debtcare.ca

Author: mgoldenberg@debtcare.ca

  • A No or Low Interest Consolidation is the Only Type of Viable Debt Consolidation

    debt2People call us all the time and tell us that they would love to pay down their debt or get rid of it altogether, but they are not quite sure of the best way to do it or even where to start. There really isn’t any one ‘best way’ that works perfectly for everyone – the best way for you depends on your situation and goals. That being said, a no or low interest consolidation is often the only viable type of consolidation.

    When you are thinking about debt consolidation to get rid of debt, here are a few of the types you may be considering:

    • Regular credit cards. This works…almost never. Why? Because credit cards are high interest – usually the highest interest of any type of consolidation product – and since debt consolidations often deal specifically with credit card debt, this option kind of defeats the purpose, no? 12% to 30% monthly compound interest makes them the most difficult to pay down, and even though using a credit card to consolidate can mean just one monthly payment, if the payment is all interest, you really are not making any inroads as far as paying off the debt.
    • Lines of credit. Although lines of credit are a popular debt consolidation option, unsecured lines of credit will often run at 8%+ interest. While this makes them less difficult to pay down, they are still not the cheapest option.
    • Home equity loans. If you have equity, these can represent a viable option, as long as the interest is low. They are easier to pay off as well. That being said, they will often run at 2% above prime or upwards, depending on credit.
    • Consumer proposals. If you don’t have equity, or have a poor credit report that makes getting any real credit an issue, these can be a great way to consolidate debt. There is no interest, often a lower balance to be repaid, and one affordable monthly payment. The trade-off is that there are implications to credit, but this option will probably result in the lowest payment and is often the best answer for people who can’t reasonably pay off their debt.

    The only way to explore all of your options for debt consolidation is to work with a company that can address any and all that are open to you.

    At DebtCare, we deal with debt. A debt consolidation may just be the answer you’re looking for when it comes to getting rid of debt. Call us today at 1-888-890-0888.

     

     

  • When Your Trustee in Bankruptcy is Pushing a Consumer Proposal…

    debt2So you’ve finally decided to get a handle on your debt. You’ve done some research, spoken to friends and family, and have decided to get in touch with a trustee. On the first consultation, that trustee in bankruptcy suggests a consumer proposal. Then continues to suggest it, making it seem as though it is your only option.

    If your trustee in bankruptcy is pushing a consumer proposal, beware!

    Don’t get us wrong. A consumer proposal is a great way to get out of debt, and thousands of

    When Your Trustee in Bankruptcy is Pushing a Consumer Proposal…

    Canadians are taking this appealing option for the number of benefits it presents. However, it is not the only way to get out of debt – and if your trustee is presenting it as such, they might have ulterior motives.

    Why should you proceed with caution? It is simple: a trustee administers proposals and bankruptcies – that being said, these individuals are not there to represent and act for you alone. Their role is to administer your estate for the benefit of you AND your creditors. Ok, that seems fair…

    The problem here is that in consumer proposals the trustee is compensated based on the amount of the proposal. That alone presents a conflict. Add to this the fact that they don’t represent you, and it, essentially, is the same as going to court with a lawyer who says that they also act for the prosecutor – not sounding like such a smart idea anymore, is it?

    If you are in debt and looking for a way out, the first thing you need to do is get an impartial opinion on the state of your credit and finances. This includes looking at ALL the ways that the debt could be addressed, including exploring consolidation options, not just a consumer proposal.

    If a proposal is the best answer, that is great – it could save you money on interest, bring down your total debt balance, and consolidate all of those debts into one tidy monthly payment. Just be sure to have your representative negotiate the proposal with the trustee – don’t go to the trustee on your own – then you get the best deal and the representation of a professional who is representing only your interests and goals!

    At DebtCare, we deal with debt every day, and we represent you and only you. If you are considering a consumer proposal or any other debt relief option, call us first. We will make sure that you are protected! 1-888-890-0888.

     

  • Credit Reports 101 – The Credit Score Range and You!

    debt1Your credit score is important. We all know this. Most of us also know why – it indicates the level of risk you present to lenders when applying for various credit products, including mortgages, car loans, personal lines of credit, credit cards, even insurance. What many people are not as sure about when it comes to credit reports is the credit score range and what the items on your report mean.

    Simply speaking, a credit score range is the range of numbers that makes up credit. The credit score range is from 300-900 – 300 representing the worst credit and 900 the best.

    Lenders say Beacon score, Equifax tells consumers FICO score – both of these mean credit score. Within your credit report there are ratings that make up your credit score.

    Here are some of the basics:

    • Each credit product will have a letter:
      • I = Installment credit like a loan
      • R = Revolving credit like a credit card
      • O = credit like cell phones
    • When you have a 1 rating, e.g. R1, this means that your account is up to date and paid as agreed
    • If your rating is 2-5 you are 30-150 days in arrears
    • If your rating is 7 you are in credit counselling
    • If your rating is 8 you have had a vehicle repossession
    • If your rating is a 9 you have gone 6 months in arrears and are considered a bad debt write-off

    These ratings will contribute, along with other things such as credit amounts and balances, to your credit score. They help lenders determine your credit behaviours and what your behaviour will likely look like if they extend credit to you.

    Now where does your credit score fall in the credit score range:

    • Under 500 – really bad credit
    • Under 550 – bad credit
    • Under 600 – not good credit
    • 620 and up – you may be approved for a CMHC insured mortgage
    • 680+ the bank will likely give you unsecured credit

    680 is what you should set as an initial goal. Anything above this usually indicates that you have positive credit history and good credit behaviour, and thus present less risk. Lower risk usually means a higher chance of obtaining credit and often a lower rate of interest.

    Ok, so you’ve determined that your number is in the 500 – lower 600 range. How can you get that score up? Rebuilding credit takes time, but it is possible.
    Here are some tips.

    • Get rid of some of your debt. Credit balances at or just below maximum are going to bring that score down, so work on paying off those debts.
    • Make sure that you are making at least the minimum payment, on time, every month, for every product. Keep in mind that just paying the minimum balance, while it will help rebuild credit history, will not really help you pay off debt as these minimums are usually little more than monthly interest.
    • Stop applying for new credit. Any time a lender pulls your credit report, a request for a new credit card will show on your report. Too many and you look like a credit seeker, someone who is living beyond their financial means.

    Credit reports and the credit score range can be confusing, but once you’ve figured out where you sit on the scale, you can work on rebuilding credit if it isn’t up to par.

    DebtCare can help. Call us today at 1-888-890-0888.

     

     

  • Stopping a Wage Garnishment is Easier Than You Think – Even a CRA One

    deb2Situation: You wake up Friday morning, it is payday, and it is going to be a good day. You check your bank account, realize there is money missing (your paycheque was only a portion of what it should have been), so you do some research and find out your wages have been garnished. So long good day…

    If a creditor or the Canada Revenue Agency is trying to garnish your wages (or has already leveraged a garnishment) you can stop it. Here are some things you need to know.

    Whether you owe a creditor or the CRA, your wages can be garnished. The only major difference between creditor garnishments and CRA garnishments is that a creditor needs to get a court order to garnish your wages and the CRA does not. (The creditor will have to sue you and win his case to get that order.) At that point, the process is fairly simple; once a court order is obtained, a letter is sent to your employer (or your clients if you are self-employed), and they are required by law to take a portion, sometimes up to 50%, and send it to the court.

    When a creditor garnishes you, your options are to pay your debt, make a motion to the court asking to set aside the garnishment and make monthly payments, get your creditor to agree to a voluntary monthly arrangement or deploy a federal government program to stop your creditor.

    When the CRA garnishes you, your options are to pay your debt, get the CRA to agree to a monthly payment arrangement or deploy a federal government program to stop your creditor.

    What is a federal government program?

    • There is a law called the Bankruptcy and Insolvency Act which offers various protections to people with serious financial problems.
    • Not all protections in the Act involve bankruptcy – there is also a consumer proposal option which is similar to a debt consolidation.

    Protection under this Act may mean that:

    • Your creditor or the CRA has to remove the garnishment
    • Interest will stop
    • The debt may be reduced
    • You will have a single monthly payment

    How do you begin the process of applying for protection under this Act? These are formal processes that need to be carried out correctly the very first time. Your best approach is to speak with a financial consultant to discuss the various options available to you, one with the knowledge and experience leveraging these programs to help individuals deal with wage garnishments.

    Stopping a wage garnishment once it has been put in place may seem impossible – but trust us, it is not. Call DebtCare today at 1-888-890-0888.

     

     

  • Credit Repair Companies and How to Choose One

    deb2Your credit controls a lot in your life. It can impact your ability to get a car, a home, insurance, and some employers will even pull a credit score as part of their reference check. When your credit is not up to snuff, you may find it difficult to obtain even the most minimal credit, and when you do find it you’ll likely be paying sky-high interest.

    This is where credit repair companies enter the scene. Often we try on our own at first to fix problem credit, trying hard to make more than minimum payments in an attempt to pay off debt and work on bringing a credit score back up. However, if you’ve decided that this route just isn’t working, and you need a little extra help and guidance, you may be considering a credit repair company’s services.

    Great. These companies exist for a reason, and that reason is to help average Canadians deal with problem credit. That being said, all credit repair companies are not created equal. While some are fantastic and honestly aim to help you repair your credit as quickly as possible, others are really little more than smash and grab schemers with no intention of actually helping you reach your goal.

    So, how do you choose the one that will truly help? There are certain things to look for, and certain things that should be considered red flags.

    Start online. Check reviews and social media to see what others are saying. Is the company on Facebook or Twitter? Are they active? This is usually a sign that they are genuine since others can post about the company. Activity which includes content that is valuable to you is also a good thing – it shows the company is taking the time to address your needs, whether you are a client or not.

    Does the company have a physical address? Are you able to find them on Google Maps and drive to an office and speak with someone? Can you find the contact information of owners and employees on the company’s website? Those smash and grab companies we spoke of earlier – they are taking money with the promise of assistance and behind the scenes the only thing they are doing is pocketing it. If there is no office, there is no real way to find a person if things go south.

    When you call for a consultation, how many solutions are offered? If there is only one solution suggested, and the underlying factors which led to the problem credit in the first place are not addressed, you may want to go with a different company on the list. The one you choose should be able to provide a plan following a review of your credit and financial profile and a process to follow-up your success.

    Credit repair is about more than just credit. Credit repair may involve changing habits and addressing debts, and these two things require a strategy.

    At DebtCare, we’ll sit down and work with you on a strategy that fits your unique situation, fixing your credit effectively, as quickly as possible. Call us today at 1-888-890-0888.

     

  • Dangerous Canada Revenue Agency Requests and What to Do if You Get One

    debt1Tax, tax, tax. There is nothing fun about tax – especially when you owe. If you owe the Canada Revenue Agency money, you are sitting on a ticking time bomb. They want that money and they will get it.

    The Canada Revenue Agency is not your friend. Agents can be sneaky when it comes to finding and collecting tax dollars. Just remember: the more they are willing to negotiate with you, the less information they have – hence the willingness to ‘cooperate’. They will only negotiate to get information from you. And once they retrieve that information, that ‘cooperation’ can turn ugly, really quickly, leading to a payment plan that you can’t conceivably manage.

    Here are some of the Canada Revenue Agency requests that may seem harmless at first:

    • Asking where you work
    • Asking where you bank
    • Sending you a financial disclosure statement
    • Asking you to submit info on your income and expenses in exchange for a payment plan

    Sure, these may seem like basic requests, but this is how the information is used:

    • Knowing where you live = search to see if you own your home, can be used to leverage a lien
    • Knowing where you work = can be used to leverage a wage garnishment
    • Knowing where you bank = can be used to leverage a frozen bank account
    • Knowing who your clients are = can be used to set-off your receivables

    If you have received any Canada Revenue Agency requests for information, you could be in serious trouble and should not try to deal with them directly, on your own. Any questions you answer, no matter how harmless they may seem, can be used against you. So, what can you do?

    If you have a tax debt that you can pay, stop ignoring it and pay it. Once you’ve paid the balance on the debt, the Canada Revenue Agency will stop collection action because you no longer owe them money. This is the best solution to the problem.

    However, if you have a tax debt you can’t pay, you have a financial problem, so get counsel before taking any action. Speaking to a financial specialist, one with the knowledge and experience helping individuals deal with Canada Revenue Agency requests and collection action, will help you determine the best course of action to deal with debt.

    In the end, our best advice is to refrain from offering the CRA any recourse for action using information willingly handed over by you, the taxpayer.

    Have a tax debt and receiving CRA requests for info and don’t know what to do? Call DebtCare. We can help you deal with the CRA and get rid of that tax debt. 1-888-890-0888.

     

  • How to Fix Bad Credit When You Don’t Know What the Bad Credit Is

    deb1When was the last time you looked, and I mean really looked, at your credit report? Do you even know what it says, or how to accurately read and decipher it? Far too often people end up with bad credit over mistakes and silly things – things that should be easy to fix. Not knowing what your report says won’t help you fix bad credit – you have to start at the source.

    The issue with credit and knowing how to fix bad credit is that most people don’t realize the variety of items which are reported, and that items are based on actions as well as amounts. Having a lot of debt is not the only thing that will lead to bad credit.

    For example, if a bad debt, no matter how small, has gone to collections, this will be reported to your report. A collection item for $200 will have the same impact to credit as a collection item for $2000. In the end, it is the action that is negative, not necessarily the amount.

    Balances are also a trigger for bad credit. Even if you pay on time, every month, having a card close to its limit can lead to a drop in your score. And again, the amount doesn’t matter. A credit card with a balance too close to the credit limit is the same whether it has a $200 limit or a $2000 limit, and a credit card with a late payment is a late payment whether $10 or $1000.

    When you go to the bank for credit and they say no, but can’t tell you why, they’ll likely tell you to contact Equifax or TransUnion – some banks use both, while some only use one or the other, so make sure you get your full Canadian credit report. Once you receive it, work through it, line by line, to determine how you got to where you are credit wise.

    What if you receive that credit report and see that mistakes are what caused your negative standing? You need a plan to address any issues. These will not fix themselves – you will need to do something if you want them removed. Any issues addressed should be documented and any payments or letters sent should be sent by registered mail or courier.

    Once issues are addressed, a resolution has to be initiated with the credit reporting agency – this process too is official and should include corresponding with the agency by registered mail or courier. Don’t leave anything to chance.

    Mistakes on a credit report are one of the most frustrating problems because these large companies have huge bureaucratic processes that can be hard for the average person to navigate.

    Want to learn more about how to repair bad credit or want help dealing with mistakes on your credit report? Don’t want to face those reporting agencies alone?

    DebtCare knows the ins and outs and can get those mistakes removed in a timely fashion. Call us today at 1-888-890-0888.

     

  • The Best Valentine Ever – A Clean Financial Slate

    debt2It is almost Valentine’s Day, and that means that everywhere you look, love seems to be in your face. If you are in a relationship that is rosy, this may just put a smile on your face and make you giddy inside. If, however, you’re at the other end of the spectrum, struggling with relationship stress, this may just make you feel down in the dumps.

    If you and your partner are having trouble, Valentine’s Day is not usually something that sparks a flame of passion. It can sometimes have the opposite effect, working to highlight how ‘happy’ everyone else is in comparison to you.

    Ok, so far this hasn’t been the happiest of articles, but we are going to try and help, we promise. This does have an optimistic point.

    A number of studies done in Canada over the last few years have narrowed down the top 5 reasons for divorce:

    • Growing apart
    • Abuse – emotional or physical
    • Infidelity
    • Mid-life Crisis
    • MONEY

    Some of these may not be workable as far as fixing an issue, but since our business is helping people with financial problems, we can at least work with one!

    Money is a major cause of strain in many relationships, so if you are constantly arguing over money, know that you’re not alone. According to CBC News, “The recent economic downturn has proven to be a stressor for families. The higher cost of living means most families now require two income earners to achieve an average standard of living. More families are also struggling with debt and poverty.” People are dealing with financial pressures on a daily basis, and this is causing pressure on relationships.

    Ok, we said we were going to help, and so far we’ve just given more bad news. That stops now. If money is a cause of concern in your relationship, leading to stress and strain, we can help. If money has been the root cause of marital problems then it should be a top priority.

    1. Sit down together and make a realistic budget. Include everything and take a positive approach to setting goals for the next year – this will give you something to work on together.
    2. Consider using your home to clean up those financial issues that are causing problems in your relationship. If you own your own home, you’ve got access to a consolidation product that can save you a lot of money and time. Using your home equity is one of the cheapest ways to consolidate debt, provided that the instrument is handled more like a loan with shorter terms and therefore lower interest.
    3. Speak with a financial specialist to get a plan in place to conquer your debt and clear up your financial stressors.

    Debt and financial issues will put a strain on any relationship – just don’t let it ruin what you’ve worked so hard to build. Remember, you are not alone.

    Call DebtCare today and make Valentine’s Day a day to celebrate again. 1-888-890-0888.

     

     

  • Getting Back to Basics: Ontario Bankruptcy Trustees and Their Role in Bankruptcy

    debtcare22016 is officially in full swing, and for many of us those New Year’s resolutions are still weighing heavily on our minds. If one of your resolutions for this year is to get your finances back on track, and you’re wondering about your options, we are here to help clear things up! This week we are getting back to the basics, talking about Ontario bankruptcy trustees and their role in bankruptcy. If this is a route you are considering, read on for some important information!

    When you decide to declare bankruptcy, you may be overwhelmed by the information available – a great deal of which likely leaves you with further questions. Here are some of the answers you are likely looking for.

    Firstly, what is an Ontario bankruptcy trustee and what do they do? A bankruptcy trustee is an individual appointed by the Superintendent of Bankruptcy and is a court official with the role of administering bankruptcies and consumer proposals. This individual does not represent the creditor or person who owes, they simply administer the estate according to the law. Their job is to follow that law, getting a fair deal for you AND your creditors.

    Reading carefully, you may have noticed that we said you AND your creditors. Their primary concern is not actually to get you the best deal, but rather to get one that benefits you and your creditors, and ultimately, serves their own interests.

    This is because, in bankruptcy and consumer proposal negotiations, everything is based on income so the trustee makes things very black and white. This may involve asking you for things that are not legally relevant to learn more about you. This information may then be used to benefit your creditors, even though you were not obligated to provide it – knowing what is required and what is not can help you protect yourself.

    Since a bankruptcy can’t be negotiated without an Ontario bankruptcy trustee, what options do you have? Well, you can choose to have a representative in your corner, one who knows the ins and outs of the law and how it provides you with protection. The best advice? Don’t go directly to a trustee. As mentioned, they advertise as though they are the ultimate solution for you, but their goal is not so singularly focussed.

    Once you are in a bankruptcy or proposal, there is no way out until you are discharged, and so ensuring the negotiations work in your favour is crucial. A representative can help to achieve this.

    Want to speak with someone before you go to a trustee, someone who can negotiate on your behalf, or just answer some of your many questions? DebtCare is here to help. Call us today at 1-888-890-0888.