debtcare.ca

Author: mgoldenberg@debtcare.ca

  • What is R9 Credit and How Can I Get Rid of It?

    What is R9 CreditMany individuals who have an R9 on their credit report will often reference their credit as ‘R9 credit’, as though R9 is the credit rating.

    Credit reports have an over-all rating. This is a number between 300 and 900.

    This rating is calculated based on everything that is listed on your credit report. 300 represents a poor rating and 900 represents the best rating.

    When you request your credit report this “score” is called a FICO score. When a lender requests your credit report they see the same score – this is called the “Beacon score”. A Beacon score and a FICO score are the same thing. R9 credit is not your overall credit score, although it will reduce it.

    What is R9 credit?

    The letter R stands for revolving and the 9 represents a “bad debt write off” so it’s a credit card, line of credit, store card or some other form of revolving credit that has gone into default. If you do not make a payment on a revolving credit product for 6 months your individual rating for that credit product will become an R9.

    An R9 will remain on your credit report for 7 years from the date of last activity (this is the last date that you made a payment on the credit).

    Many people think that somehow the bad rating will magically disappears after 7 years but it is important to note that it is 7 years from the date of last activity and it won’t necessarily go away on its own. This is a very common credit report error that many people end up spending many months to resolve.

    R9 credit can be resolved in one of a few ways:

    1. You can pay the debt in full – it should be removed 7 years from the date the debt has been paid in full.

    2. You can make a settlement on the debt with your creditor(s) the R9 credit should be removed from your credit 7 years from the date it is reported as settled.

    a. Settlements must be documented, including proof of settlement being accepted by your creditor and proof of payment.
    b. Equifax must be independently notified of the settlement.
    c. You must follow up to ensure that the settlement has been reported to your credit report.

    3. If you go to credit counselling, the R9 credit will turn into an R7 credit and the R7 will be removed from your credit report 3 years from the date the credit counselling plan is paid in full.

    4. If you file a consumer proposal the R9 credit will be removed from your credit 6 years from the date it is paid in full make sure when you file a consumer proposal that you independently send proof of the consumer proposal to Equifax.

    5. A bankruptcy  the R9 credit will be removed from your credit 6 years from the date the bankruptcy is discharged make sure when you file a bankruptcy that you independently send proof of the bankruptcy to Equifax.

    6. R9 credit can also be removed 7 years from the date of last activity if that was the last time a payment was made on the credit product. This is in no way a slam dunk often creditors will continue to report activity to the credit report even after there hasn’t been any. Also, if the account is purchased by a collection agency, this can become extremely complex.

    Having this issue on your credit report is not great but it isn’t the end of the world either.

    There are ways to not only work to have the R9 removed but also to correct any other bad credit to help rebuild your credit score. Speaking with a financial consultant skilled in dealing with R9 credit is a smart practice.

    If you have R9 credit and need help please contact DebtCare by calling 1-888-890-0888 or visit www.debtcare.ca.

  • How to Deal with Credit Report Errors

    Thousands of Canadians have credit report errors on their credit reports – the scary part is many of them don’t even know it.Credit Report Errors

    Credit report errors most commonly occur when your creditors don’t accurately report information to your credit report. The reason credit report errors are so common is because the data is reported electronically by your creditor to your credit report.

    You may be getting declined for credit or quoted higher interest rates on credit because of credit report errors and new lenders you apply to for credit are not allowed to tell you what’s on your credit, so it won’t be pointed out to you.

    The most common types of credit report errors are payments and settlements that have not been reported. The only way to avoid credit report errors is to know what’s being reported to your credit report. The first step you have to take if you want to avoid credit report errors is to request your credit report from both Equifax and TransUnion.

    Credit report errors can be extremely difficult to get resolved because Equifax will require evidence from you to support that there is an error and if you don’t have it or they won’t accept what you provide you then have to rely on your creditor to report the correct information. Creditors can take months to do so, if they do so at all.

    The only way to get credit report errors corrected quickly is to know your rights and to dedicate the time needed to accomplish the task.

    1. The Ministry of Consumer Services is the ministry responsible for the Consumer Reporting Act which is the legislation that consumer reporting agencies like Equifax and TransUnion, as well as your creditors, must follow when reporting your personal information.

    2. Any communication concerning corrections that are needed should be sent in writing and should be sent by registered mail.

    3. You must know the timelines in which you should expect credit report errors to be updated, make sure that you request your credit report to ensure that they have been made and if they have not follow up again in writing.

    Failing to ensure that there are no errors reporting to your credit report can have serious consequences. Not just because you may not be able to obtain the credit you need but also because you will most certainly pay higher interest rates on credit products if lenders view the credit report errors as derogatory which could cost you thousands of dollars or more.

    If you are thinking right now that you don’t have the time, energy or know-how to take on your credit report errors on your own – you are not alone. Many who advertise ‘fix your credit’ programs are actually companies looking to see you deal with credit problems through a bankruptcy or credit counselling. We take the position that credit errors are credit errors – not bad credit – even bad credit can be addressed using various financial strategies that do not involve bankruptcy. Following the Consumer Reporting Act and leveraging our in-house legal counsel, we fight Equifax, fight your creditors and get your credit fixed.

    If you need to fix credit report errors on your credit report, contact DebtCare Canada today by calling 888-890-0888.

  • Can You Really Trust An Ontario Bankruptcy Trustee

    Ontario Bankruptcy TrusteeBefore you can determine if you can trust an Ontario bankruptcy trustee, you first have to understand what an Ontario bankruptcy trustee is and what his or her role in a bankruptcy or consumer proposal is.

    An Ontario bankruptcy trustee is an individual or a corporation that is licensed by the Superintendent of Bankruptcy. Bankruptcy trustees are regulated federally. The role of an Ontario bankruptcy trustee is to administer bankruptcies and proposals, administer the estates of the bankrupts, hold in trust and subsequently distribute the assets of the bankrupt. The bankruptcy trustee must follow the Bankruptcy and Insolvency Act (BIA).

    The bankruptcy trustee is to be impartial and act in the best interests of both the bankrupt and the creditors. The same is true whether you are filing a consumer proposal or a bankruptcy. In the case of a bankruptcy, the bankruptcy trustee can oppose your discharge if you have not fulfilled your obligations under the bankruptcy. These obligations can change over the course of your bankruptcy and/or as a result of undisclosed information at the time you filed for bankruptcy. In layman’s terms, if you incorrectly estimate the value of an asset, forget to tell the trustee that you have a particular asset or in the middle of your bankruptcy you get a better job, this may change your monthly payment in bankruptcy and the length of time you are bankrupt – the bankruptcy trustee will make this determination.

    In the case of a consumer proposal you don’t have an ongoing obligation to the bankruptcy trustee like you do in a bankruptcy. With that said, the bankruptcy trustee assesses the proposal they will offer your creditors based on extracting maximum value for your creditors.

    So the answer to the question “can you trust an Ontario bankruptcy trustee” is yes. They are a licensed, regulated officer of the court. However, now that you know the role a trustee plays in a bankruptcy or consumer proposal, it may not be wise to approach him or her directly, no matter how warm and fuzzy the advertising is.

    Consumer proposals and bankruptcies are good options for getting out of debt and starting off on a fresh footing, but before jumping to this conclusion it is important to consider all of your financial options. Working with a qualified financial consultant that is experienced working with debt consolidation, mortgages, debt settlements, consumer proposals and bankruptcies will make you aware of these options. A financial consultant who is hired by you to represent your financial interests will ensure that you can be open and honest about all of your finances, ask questions that won’t impact you and assess a host of different financial choices. He or she can also line you up with the appropriate professionals (this includes bankruptcy trustees if necessary) and represent you through the process. This takes the burden off of you and ensures that you walk away with the best possible deal. In the case of a consumer proposal you could save thousands of dollars.

    If you are struggling with a financial problem and would like to review your financial options contact DebtCare Canada at 888-890-0888 or visit www.debtcare.ca.

  • How to Check Your Credit Score?

    In Canada, a credit Check Your Credit Scorereport and credit score is used by many different institutions, including banks, credit agencies, and even employers. These documents contain important information about your borrowing and repayment habits, and provide a detailed account of your past financial history. Even though these reports are so important, many Canadians are not familiar with the process of requesting and understanding the credit score.

    Understanding your credit score is important for a number of reasons. One of the most important is because, whenever you apply for credit, be it a mortgage, automotive financing, or a credit card, your credit report is pulled by the lending institution and assessed. In order to qualify, you must meet certain qualifications with regard to the report, and so knowing where you stand is crucial.

    What if your credit score is less than stellar? Too much credit, being too close to your limits or too many late or missed payments can severely reduce your credit score.

    In order to bring the score up, it might be prudent to speak with a financial debt consultant to discuss some options to reduce your debt and regain those lost credit points. Debt consolidation or consumer proposals are great options to help you get rid of your debt.

    So, do you know how to check your credit score and credit report? Here is some important information that will help.

    Requesting your credit score is actually quite simple. There are a few different credit reporting agencies in Canada, but the most popular are TransUnion and Equifax. Both of these agencies provide online copies of your credit report and credit score for a fee – simply visit the website, enter in some identity confirming information, and you will be able to print your credit report and credit score.

    Another reason that it is important to understand how to check your credit score and credit report is to make sure that everything it contains is accurate. Credit reporting agencies can make mistakes when compiling the information, and if something is reported incorrectly this can harm your overall credit. It is important to check your report regularly in order to find any mistakes and remedy them. That being said, when a mistake is brought to the attention of a credit reporting agency you may find yourself frustrated by the amount of back and forth that takes place. If you find yourself having a hard time dealing with those credit reporting agencies and their unwillingness to accept responsibility or fix the incorrect data, contact a financial consultant who can help get the issue resolved.

    If you want more information about how to check your credit score and how to understand your credit report, please contact DebtCare Canada by calling 888-890-0888 or visit www.debtcare.ca.

  • How Can I Fix My Credit?

    Fix My CreditWe all know that bad things happen to good people. No one wakes up in the morning wanting to damage his or her credit. Thousands of Canadians have damaged credit, so if you are wondering “how can I fix my credit”, know that you are not alone and fortunately it can be done – and fairly quickly.

    To all those who want the answer to the question “how can I fix my credit”, here are some tips:

    Before you can repair credit you must deal with any past problem credit. First of all, the old adage that bad credit, even bad credit with unpaid balances, will simply fall off the credit report after 7 years is a myth and banking on that happening may leave you disappointed in the end. Before you can repair your credit you must get rid of unpaid balances associated with bad credit. Easier said than done, right? Well, actually it isn’t. There are many programs available to consumers who have outstanding balances on bad credit where you can make settlements at significantly less than what you owe and freeze the interest accruing. Debt consolidation is another realistic option. Leveraging home equity or having a co-signer can enable you to consolidate debt, paying off the defaulted balances.

    Once the bad credit balances are dealt with it’s time to get to work and rebuild. The two best products that can be used to accomplish this are a secured credit card which reports to your credit report coupled with a secured loan like a GIC which will report to your credit and enable you to work towards an asset. Avoid credit products that bear sky high interest and don’t report to your credit report like payday loans.

    Once new credit is arranged to rebuild, how you manage the new credit will be vital. Many misguided consumers think that when they get that secured credit card they should use it and make monthly payments to rebuild. Unlike installment credit (a loan), revolving credit can be good for your credit or ruin your credit depending how you manage it – even if you make your monthly payments on time. If you run up a large balance on your secured credit card and it is close to, at, or over the limit, this will negatively impact your credit. A good rule of thumb is to only use what you can pay in full each month and don’t exceed 50% of your credit limit as a balance. This means that if you have a secured card with a $200 limit, keep your monthly spending on the credit card under $100 per month. How you manage even the smallest credit card is an indicator to future creditors of whether or not you are a credit risk.

    What to avoid: avoid store cards like furniture cards. All too often people buy furniture and get financing on a card offered through the store. If you buy $2,000 worth of furniture and then they get you approved for $2,000 worth of financing – even if it is interest free and even if there are no monthly payment obligations – this will have the impact of a maxed out credit card on your credit report. Avoid making more than 4 applications for credit in any one given calendar year. Credit applications are reported to your credit report and too many will reduce your credit score and make you appear as a “credit seeker” to new creditors. Be careful because many companies will try to look at your credit: employers, banks when opening accounts, gyms, insurance companies, etc. Generally speaking, if you are about to go into a contract with any organization and you are being asked to sign something, read the small print – it could include your permission to access your credit report.

    Now that we have addressed the question “how can I fix my credit”, let’s get started! Contact DebtCare Canada today at 888-890-0888 or visit www.debtcare.ca.

  • Spring Cleaning Should Include Cleaning Up Your Finances

    Cleaning you your FinancesThe sun is shining and spring is in the air. Cars are lined up at carwashes and the parks are filled with people taking advantage of the warm weather. And, with the advent of spring comes the inevitable ‘spring clean’. From a financial perspective, the spring clean also represents the perfect opportunity to get your finances cleaned up.

    Still feeling weighed down by a financial boulder? You are not alone. Canadians everywhere are dealing with rising debt loads and relying on credit to pay for everything. If you are struggling with debt, it is time to take control and clean up your finances. We’ve compiled a list of ways to help you manage this spring clean.

    Financial Spring Clean Tip #1: Make a list. Sure this list won’t include things like washing all of the windows or cleaning out the garage, but it should include those financial goals you want to achieve in the coming months. It is easier to stick to something if you can physically tick things off of that list.

    Financial Spring Clean Tip #2: Create a budget. Sure this seems like a band-aid solution that many individuals attempt – but if you are serious about taking out the ‘debt’ trash, creating a realistic budget and sticking to it is crucial. A budget, one that takes into account every aspect of your monthly finances, can show you exactly where you need to sweep away some of that extra spending and where you can save.

    Financial Spring Clean Tip #3: Organize. Just as you would organize those closets or bins collecting miscellaneous junk, organize your debt. A great way to do this is to consolidate. Instead of having several different credit cards, loans, and lines of credit, consolidating debt merges all of these into one, neat, tidy monthly payment. The added bonus here is that this also reduces the amount of your monthly interest. So, just like purging your closet gets rid of those items collecting dust, consolidation gets rid of that extra financial burden.

    Financial Spring Clean Tip #4: Call in the professionals. Rather than attempting to tackle that mountain on your own, seek the guidance of someone that knows exactly how to help you get out of debt. A professional financial consultant can give you the advice you need and present the options that will help you get rid of your debt. Whether it be budgeting tips, a consumer proposal, or bankruptcy, a seasoned financial consultant, one with your best interest in mind, will get you on the right track to financial spring cleaning.

    Don’t let another year of debt build up. See spring as the perfect opportunity to get your finances under control and regain your financial independence.

    To get started on your financial spring cleaning and get rid of your debt for good, please contact DebtCare Canada online or call 888-890-0888.

  • 3 Reasons Why You Should Not Try to Negotiate with the CRA Directly

    3 Reasons Why You Should Not Try to Negotiate with the CRA Directly photoThousands of Canadians struggle with tax problems. One of the worst things that you can do if you have a tax problem that has or will result in a debt that you can’t pay is to try to negotiate with the CRA directly. The reason for this is because the CRA has a single mandate and that is to close your file, whether the money is successfully collected from you or not.

    It may sound like it doesn’t make sense, but in fact it does. When a taxpayer is behind filing tax returns or has a large tax debt, the CRA’s success is actually benchmarked by files closed and not dollars collected. This means that, as time goes on, interest and penalties accumulate and by the time you file late returns or decide to try to pay your tax debt, bam – your tax debt may have doubled or even tripled in size.

    How does the CRA close files? By coming after you! Leveraging tactics like wage garnishments, sending garnishments to your clients (in the case of self-employed people and contractors), freezing your bank account, placing liens on your property and more… Sometimes one tactic will be deployed or multiples will be deployed all at once. Doing this forces you to do one of two things – pay the debt or go bankrupt or file a consumer proposal – all three result in your file being closed.

    This is why negotiating directly with the CRA can be dangerous. The average person doesn’t know what the CRA is capable of, so in good faith will try to negotiate, resulting in more personal exposure. The CRA will play good cop, bad cop – having one agent go after you and then another swooping in and being nice, delicately extracting your personal information to be used against you at a later date. The CRA may accept a temporary payment plan or suspend an enforcement measure “if” you complete a financial disclosure form that includes telling them any assets that you own, where you work and where you bank.

    While the CRA has methods to find out your personal information, why serve it up to them on a silver platter, making it that much quicker and easier for them to come after you? At the end of the day, if you have a tax debt that you cannot pay you have a financial problem.

    A financial problem can be resolved through a consultation with a financial consultant who routinely deals with CRA matters. Don’t go it alone – good help is out there. If you have a tax debt and you need help please call DebtCare Canada at 888-890-0888 or visit www.debtcare.ca.

  • Is the Big Bad Wolf Calling?

  • What to Do if Your Wages Are Being Garnished

    Wages Being GarnishedIf your wages are being garnished then no doubt you are feeling the pain. Having your wages garnished results in severe financial problems and even embarrassment at work. There are different types of wage garnishments that have financial impacts.

    If your wages are being garnished as a result of family responsibility there is little that you can do outside of working with a lawyer to try to get the amount of the wage garnishment reduced or to work towards paying up your arrears and then moving to a voluntary monthly payment plan. There isn’t really any protection for individuals who have unpaid child support. Child support wage garnishments can consume up to 50% of your income.

    If your wages are being garnished as a result of a judgement in small claims court you do have some options. You can make a motion to the local small claims court and ask a judge to reduce the amount of the wage garnishment or to lift it and allow for an agreed-upon voluntary monthly payment. While this can be effective, the courts do have the final say, and can say no. It also depends on your creditor. You can also look at working with a financial consultant to make a proposal to your creditor so that they agree to lift the judgement. This can be quite effective and even result in the interest that is accumulating on your debt being frozen. A garnishment imposed through the small claims court can consume up to 20% of your wages in most Canadian provinces.

    If your wages are being garnished by the Canada Revenue Agency (CRA) this is by far the most dangerous type of garnishment. A CRA garnishment can consume up to 50% of employment income and up to 100% of secondary income. For example, if you are a contractor the CRA can demand that your client send 100% of your earnings. This is the most dangerous type of garnishment because a CRA imposed garnishment can literally make it impossible to pay for the necessities of life, such as food, transportation and shelter. Those who are self-employed may lose business or have clients simply walk away because dealing with the garnishment is just too much hassle.

    Like judgements issued through small claims court, a good financial consultant can also help you to combat a CRA garnishment. There are programs and protections available that can stop a garnishment (even one issued by the CRA), freeze interest and even reduce the amount of the debt.

    Do not continue suffering in silence. If a wage garnishment is holding you back, help is only a phone call away. For more information please call DebtCare Canada at 888-890-0888 or visit www.debtcare.ca.

  • Why an Ontario Trustee in Bankruptcy May Not be the Best Choice

    Traditionally when people think of an Ontario trustee in bankruptcy they think of bankruptcy. The fact is that the Ontario trustee in bankruptcy has changed in recent years. In the past, if you had severe financial problems, you may have thought that bankruptcy was the only way out and so you would seek out an Ontario trustee in bankruptcy.

    So what has changed? In recent years, the bankruptcy laws have changed making it more difficult to file for bankruptcy and making consumer proposals a much more attractive option for people who struggle with debt. Also, Ontario trustees in bankruptcy have begun advertising much more aggressively. If you don’t know what an Ontario trustee in bankruptcy is then you may misunderstand this advertising and think that when you are calling you are going to have some other financial options. However, generally speaking, the only two programs that bankruptcy trustees offer are bankruptcies and consumer proposals.

    So what’s the big deal if you end up at an Ontario bankruptcy trustee’s office? Maybe a consumer proposal or bankruptcy was what you had in mind anyway. Going to an Ontario bankruptcy trustee may in fact be a big deal because if you buy into the debt solutions offered, a trustee does not in fact represent you and you alone through the process.

    An Ontario bankruptcy trustee has a responsibility to represent both you and your creditors. This means that if you want to file a bankruptcy or consumer proposal it is the trustee’s job to ensure that your creditors get a fair deal and that they are able to get as much money out of you as possible. Here is a really great example:

    1. Suzy goes to an Ontario trustee in bankruptcy and decides that bankruptcy is the only option for her. The Ontario trustee in bankruptcy asks Suzy to complete a long document where she has to provide detailed financial information.
    2. Suzy owns a home that she bought 5 years ago for $300,000 and assumes that it is worth about the same amount of money, so she indicates on the form that the home’s value is $300,000.
    3. The Ontario bankruptcy trustee allows her to file for bankruptcy based on the financial disclosure that Suzy has made.
    4. Based on this approval, Suzy is told what her monthly payment will be over a prescribed time period.
    5. The Ontario trustee in bankruptcy has a team inside his or her firm which reviews the bankrupt’s assets, and without provocation from creditors, the Ontario trustee in bankruptcy later deems that Suzy’s house is worth $400,000, not $300,000.
    6. The Ontario trustee in bankruptcy writes to Suzy and advises her that she owes thousands of dollars in surplus income that will have to be paid to her creditors or else the Ontario trustee in bankruptcy will oppose her discharge.

    Can you imagine how you would feel if this happened to you? Filing for bankruptcy or filing a consumer proposal unrepresented is much like being accused of a crime and defending yourself without representation. If you were being charged with a crime it would not be wise to go to court without a lawyer. Where an Ontario trustee in bankruptcy is concerned, it may not be a good choice to go to them directly without seeking independent financial advice. Instead, visit a financial consultant 1) to ensure that you have explored all of your financial options; 2) to ensure that you make complete disclosure and to determine your personal exposure so that nothing comes up later; and 3) to ensure that the best possible deal is negotiated with the Ontario trustee in bankruptcy.

    If you have a financial problem and need help, please contact DebtCare Canada at 888-890-0888 or visit www.debtcare.ca.