debtcare.ca

Author: mgoldenberg@debtcare.ca

  • BOC Interest Rate Announcement and Your Lendable Equity: Are They Correlated?

    The COVID-19 pandemic has impacted economies across the globe and the Canadian economy is no different. Economic uncertainty has led to business closures, unemployment, and a decline in real estate activity.

    Looking specifically at the real estate industry, there has been a significant decline in the number of properties sold over the past few months. In fact, according to the Housing Market Outlook, CMHC does not expect housing sales and prices to recover before mid-2021.

    What does the future hold? 

    The decline in Canada’s real estate industry has a direct correlation with the rising rate of unemployment. In May 2020, the unemployment rate was the highest it has been in over four decades! Additionally, many jobs in Canada have disappeared altogether. 

    Ontario alone has lost over one million jobs since the pandemic started. Canada’s national statistics agency reported the loss of over 64,500 jobs, only in the month of May, bringing the provincial unemployment rate to a staggering 13.6%.

    Due to the growing uncertainty and strained budgets, many Canadians have to choose between taking care of current pressing expenses and making debt payments. To top it off, the short-term debt relief that kept them afloat is now ending.

    Therefore, the Canadian government is deploying various fiscal policies, along with lower interest rates, to pave a path for economic recovery. In a recent press release, BOC shared an overnight target rate of 0.25%. As the interest rate continues to remain low, there is an opportunity for you to refinance your mortgage and explore other debt repayment options.

    Assessing your net worth

    A good point to start from would be reassessing your net worth. You can do this by simply deducting your overall debt from the value of your assets. In case, you don’t have a decent credit score (680+) and provable income, you may have to rely on your home equity to clean up your finances.

    Though, in addition to the housing regulations introduced in the recent years, CHMC has announced further tightening of lending standards in June 2020 to protect the housing market during COVID-19. Due to these additional measures and the high unemployment rate, CMHC has forecasted a 9-18% decline in the average house prices over the next year.

    This will impact your loan-to-value (LTV) ratio (the ratio of the loan to the value of your home) and reduce the lendable equity available. As the value of a property decreases it reduces the amount you are able to borrow.

    Plus, if your credit has been bruised or your income was disrupted due to COVID-19, a trust company, a mortgage investment corporation, or a private lender might also be hesitant to lend to you as they base their decision to lend mainly on equity.

    This is why a quick and accurate analysis of equity and credit is absolutely essential at this point in time!

    Planning ahead

    Equipped with the right information you can avoid unpleasant surprises and restructure your debt on better terms.

    Discuss your financial circumstances with a debt counsellor to get guidance and create an actionable plan. Choose an experienced debt counsellor who can connect you to lenders, who have access to federal government programs, to protect you if refinancing is not an option.

    Even if you’re laid off, depending on your equity position, a qualified debt counsellor can still provide solid recommendations. For instance, they may recommend taking out a home equity loan. Home equity loans allow you to consolidate your high-interest debt such as overdrafts and credit cards into a single monthly payment. This not only improves your finances but also enables you to take advantage of lower interest rates and improve your credit rating.

    At DebtCare Canada, we offer a free consultation to discuss debt consolidation and settlement solutions that are right for you.

    Contact us by calling or texting 1-888-890-0888 or visit www.debtcare.ca to learn more.

    You can also find out more about our debt consolidation and financial solutions here: https://debtcare.ca/financial-products/

    The next BOC announcement is scheduled for September 09, 2020.

  • Find Out the Best Debt Consolidation Method for You [Debt Calculator]

    What is the best debt consolidation method for you?

    You might think you know the answer — or have no idea. Either is fine!

    But if you want to get out of debt for good, it’s time to put the question to the test.

    Enter our new tool, the online debt repayment calculator.

    With this tool, you can quickly and easily calculate how you can be out of debt in five years or less!

    All you have to do is enter your total debt (excluding mortgages), then the calculator will do its work.

    It will show you how much it will cost to pay off your debt over five years, compared by debt consolidation method, and how much the monthly debt payment would be.

    For instance, if you had $100,000 worth of debt, your options might be:

    • Do nothing – this would cost you $158,963.30 over five years with a monthly payment of $2,649.39 per month.
    • Debt consolidation — this would cost you $133,466.69 over five years with a monthly payment of $2,224.44 per month.
    • Credit counselling — this would cost you $110,000 over five years with a monthly payment of $1,833.33 per month.
    • A DebtCare solution — this would cost you $30,000 over five years with a monthly payment of $500 per month.

    Try it for yourself! Access the debt calculator here.

    *This calculator is for demonstration purposes only. The results will vary depending on your specific circumstances which include your income and any assets. A minimum of $6,000 of unsecured debt is required.

    If you have any questions or want to take action on getting debt free for good, Contact DebtCare Canada today by phone at 1-888-890-0888 or try our free online assessment at https://debtcare.ca/form.html. We can assist you with paying down your debt and getting a fresh start.

  • Happy Canada Day from DebtCare Canada

    Happy Canada Day from the DebtCare Canada team!

    We hope that you celebrate Canada’s 153rd birthday safely and wish you the best.

  • Find Out How Much House You Can Afford! [Online Mortgage Calculator]

    Find out exactly how much house you can afford!

    We’re excited to offer a new online tool that can help you make your homebuying dreams a reality.

    The new mortgage calculator lets you quickly assess your financial standing to see exactly what you’ll be able to afford once you decide to buy a home.

    You will need to answer a few questions, including:

    • Your total annual income, before taxes. (If you’re buying with another person, this should include their income, too.)
    • How much you have saved for your down payment. (We recommend having at least 5% of the house price.)
    • How much you spend on monthly loan repayments, including child support, student loans, personal or car loans, and more.
    • Your total amount of credit card debt.
    • Your credit health – good, a few late payments, active collections, or a previous bankruptcy.

    From there, the calculator will give you an estimate of how much mortgage you could qualify for.

    The results are based on the Government of Canada’s mortgage stress test. Access the online mortgage calculator here.

    To gain an even more accurate result, you can complete an application and speak to the M.O.S. MortgageOne Solutions Ltd. Team. Contact mortgage agent Michael Goldenberg at 888-890-0888 or mortgages@debtcare.ca for more information.

    If you find out that you qualify for less than you hoped, don’t worry! We can also help you manage your finances to see how to qualify for more mortgage. Learn more at www.debtcare.ca.

  • Pros and Cons of Refinancing Your Mortgage to Get Out of Debt

    Mortgage refinancing is a popular way to get out of debt, but is it the right option for you?

    During the ongoing COVID-19 pandemic, you may be looking for ways to reduce your debt load. If you own a home, you can use available equity to pay down your debts. Read on for the pros and cons.

    Pros

    • Refinancing your mortgage allows you to put debts into one payment.

    This can give you more freedom in your budget as you will have a fixed payment on a fixed schedule — so you will know exactly what you owe and when.

    This is an effective way to quickly deal with high-interest debt while managing your budget.

    • It lets you keep your house (unlike some cases of filing for insolvency).

    In some cases, filing for bankruptcy or a consumer proposal puts your assets — like your house — at risk.

    With a mortgage refinancing, your home is safe so long as you meet your payments.

    • You could save money if you get a lower interest rate.

    If you refinance for a lower mortgage rate, you could save money on your monthly mortgage payments if you bought your home at a time when interest rates were higher.

    • It doesn’t harm your credit score (at least not immediately).

    When you file for bankruptcy or a consumer proposal, your credit score takes an immediate hit and you are left with a low rating for five-to-seven years.

    With mortgage refinancing, however, that doesn’t happen. In fact, if you are using the equity to pay off high-interest debts, like credit cards, your credit score could go up!

    The caveat here is that if you default on your mortgage or miss a payment, your long-term credit score could still be affected.

    Cons

    • It could restart your amortization schedule.

    If you were five years into a 25-year mortgage term and decided to refinance, your term would reset to 25 years. This means you would be paying your mortgage for an extra five years.

    While you would be paying mostly interest for the last five years, it will be longer until you are mortgage-free.

    • You might get a higher interest rate.

    Depending on when you bought your house, your mortgage rate could actually go up.

    • You will have less equity to access later.

    By taking out equity now, it may be harder to access later (at least through a refinancing) and you’ll have to wait for it to accumulate again.

    • It may not be possible if you’re carrying too much debt.

    Like getting a mortgage to begin with, you have to qualify for a refinancing. If you’ve lost your income, your credit score is low, or you’re carrying too much debt, you may not qualify.

    (If this is the case, talk to a debt counsellor – they can help you clean up your finances so you can qualify.)

    • You may have to pay closing costs.

    Mortgage refinancing typically comes with closing costs and other fees. These numbers could affect your decision.

    • If you’re breaking your current mortgage term, it might not make financial sense.

    Breaking your current term early can come with additional costs.

    If mortgage refinancing won’t work for you, there may be another option that does, such as taking out a second mortgage, a home equity line of credit (HELOC), or another debt consolidation method.

    Whatever method you choose — refinancing or not — the important thing to keep in mind is that it will work so long as you keep your finances under control. Debt consolidation isn’t an invitation to start buying more. You need to have a plan for how to manage your money after refinancing (or your chosen debt management method) too.

    At DebtCare Canada, we can help you do both — explore options to deal with debt and create a plan to stay debt-free for good.

    We offer first mortgages, second mortgages, HELOCs, and more.

    Contact us today for a free consultation. Call or text 1-888-890-0888 or visit www.debtcare.ca.

  • Two New Tools to Take Control of Your Finances

    Mortgage Affordability Calculator and Debt Repayment Calculator

    Exciting announcement — we have two great new tools that can help you take control of both your debt payments and your homeownership dreams.

    Here’s what’s new:

    Tool #1: Mortgage Payment Calculator

    The mortgage calculator, available through The Mortgage Centre, is a quick, easy way to assess your mortgage possibilities.

    There are actually three tools available in this calculator:

    a)  Find out how much home you can afford — if this is your first time buying a house, this can tell you what mortgage amount you could qualify for.
    b)  Find out if you can afford a specific home — if you’ve found your dream home but aren’t sure if you can finance it, this tool can tell you the answer.
    c)  Find out if you can refinance a home that you already own — you can discover how much equity you can take out of your existing mortgage.

    These tools are highly valuable for getting an idea of where you stand. From there, mortgage agent Michael Goldenberg can help you make your homebuying dreams a reality.

    Plus if you find that you can’t afford your dream home or take out as much equity as you would like, Michael can also help assess your overall financial position to make a plan.

    Access the mortgage calculator here.

    Tool #2: Debt Repayment Calculator

    The second tool is a debt repayment calculator that shows you how to become debt-free in five years — or less!

    Use the calculator to determine exactly how soon you can become free of debt (excluding mortgages).

    The calculator compares various debt repayment methods to show which method is the fastest. It also shows how much it will cost to become debt-free, in comparison to your total debt.

    Methods compared include:

    • Doing nothing.
    • Debt consolidation.
    • Credit counselling.
    • DebtCare solution.

    The results will vary depending on your specific circumstances, which include your income and any assets. A minimum of $6,000 of unsecured debt is required.

    If you have any questions about the calculator or your results, please call us at 1-888-890-0888.

    Access the online debt calculator here.

    Take Control of Your Finances!

    These tools give you a proactive way to manage your finances and plan for your future. But you don’t have to do it alone! DebtCare Canada is your partner is getting rid of debt and achieving the financial future you want.

    Learn more about our solutions by calling 1 (888) 890-0888 or visiting www.debtcare.ca.

  • Where To Get Online Debt Help — Payday Lenders Are NOT The Answer!

    During the COVID-19 pandemic, many Canadians have lost their jobs or are receiving reduced income.

    But while incomes have declined, debt payments haven’t necessarily done the same.

    Some lenders offered loan deferrals, but it’s important to note that deferrals aren’t forgiveness. What this means is that you will have to pay those debts eventually — and it may come with extra costs, such as interest for the deferral period.

    And not all lenders have even offered these deferrals. Some may expect you to keep making your payments throughout the COVID-19 pandemic, plus your other bills, like housing and utilities.

    If you’re in this boat, you might need help to get out of debt.

    The Problem with Payday Loans

    Payday loans should be avoided completely if you want to get out of debt.

    The simple truth is that payday loans rarely (if ever) actually improve your finances. This is because:

    • They’re short-term. They need to be repaid within 14 to 62 days.
    • They come with sky-high interest rates. Payday lenders often charge an annual interest rate of between 391% and 652%!

    The worst part is that payday loans trap you into a vicious cycle that creates more debt.

    Take this scenario:

    • You take out an advance on your paycheque for $750, plus fees and interest.
    • That money must be paid back within three weeks, or 21 days.
    • You receive your next paycheque, but your other bills have come due and you need the pay to pay for those obligations.
    • You’re unable to pay back the payday loan – what do you do?

    For most people, the answer is take to out another payday loan, which creates an unending cycle of paying off debt with more debt.

    During the COVID-19 pandemic, payday loans are even more unsustainable. If your income has been affected, you may not have another paycheque to find the funds, or you could be dipping into emergency help benefits, such as CERB payments.

    Where to Get Online Debt Help During the COVID-19 Pandemic

    There are other options to get out of debt besides payday loans.

    You might consider:

    • Budget management.
    • Financial restructuring or debt consolidation.
    • Settling outstanding debts.
    • Refinancing your mortgage.
    • Special programs (such as the access DebtCare Canada provides to a program that can resolve a CRA back tax problem).
    • Filing for insolvency – bankruptcy or a consumer proposal.
    • And more.

    The exact options will depend on your situation. At DebtCare Canada, our consultants look at your whole financial picture to find the best solution for you.

    During COVID-19, you’ll need to get online debt help to maintain physical distancing. DebtCare has been able to operate 100% remotely since the start of the pandemic. You can book a free consultation by:

    • Calling 1-888-890-0888
    • Texting “HELP” to 1-888-890-0888
    • Visiting debtcare.ca/

  • How to Cope Financially If EI Assistance is Not Enough

    Since the COVID-19 pandemic hit, many Canadians have been out of work. Statistics Canada found that one-in-five Canadian businesses have laid off more than 80% of their staff.

    As the unemployment numbers rise, Canadians have turned to federal assistance — employment insurance (EI) and the Canada Emergency Response Benefit (CERB).

    Maclean’s reported that as of April 28, Service Canada had received 7.3 million applications through CERB. CERB gives Canadians up to $2,000 for a four-week period.

    While this help is certainly better than nothing, it may not be enough.

    For instance, even if a person receives the maximum CERB amount of $2,000 per month, their income pre-COVID-19 may have been higher. Statistics Canada reported that Canadians earned, an average of $4,383 per month at the start of 2019

    What’s more, some people don’t qualify for CERB or EI yet they have still taken a hit in income. Global News reported that two in 10 Canadians are facing reduced pay.

    If you’re struggling to make ends meet, you need to know how to cope.

    A) Look at Where Your Money is Going

    The first step is to assess where your income is going.

    Rent and/or mortgage payments will be a bulk of the budget for many, plus groceries and utility bills. Include any automatic payments, such as funds that go directly to a savings account, to this total.

    Break down how much each is costing you per month. You need to know this information so you can figure out the gap in your income.

    B) Find Places to Cut Costs,

    From here, find the places where you can cut costs. For many, this will mean looking for ways to save money on groceries and cutting out non-essential purchases.

    Prioritize the payments that relate to your shelter, to your health, and your financial obligations (more on this in the next step).

    C) Deal with Debt

    According to Equifax Canada, the average debt per consumer reached $72,950 at the end of 2019.

    Many Canadians carry high loads of credit card debt, lines of credit, loans, and monthly payments (such as paying off a new cell phone).

    These payments can take up a significant chunk of your monthly budget. That might have been manageable pre-COVID-19 (or not — a survey from MNP found that 46% of Canadians were $200 or less away from insolvency). But even if it was manageable before, if you’ve taken a hit in income, it may not be manageable now.

    The answer isn’t to ignore it – or to keep paying it, especially if you need that money for necessities such as shelter or food. Instead, you need to look at debt management options.

    Filing for insolvency — bankruptcy or consumer proposal — is one option, but it’s not the only option. The best plan takes your whole financial situation into account and looks at the types of debt that you owe.

    This is where a debt counsellor (like DebtCare Canada) comes in. We help you deal with your debts and make a plan to cope financially during COVID-19.

    What to Do if You Can’t Apply for CERB Because You Haven’t Filed Taxes

    There’s another common problem – you may qualify for CERB but can’t apply online through the CRA because you owe income tax from previous years or haven’t filed your returns.

    DebtCare Canada can help you deal with back taxes once and for all so you can eliminate the stress and access emergency assistance. We provide access to one of the only programs that can resolve a CRA back tax problem.

    Get Debt Help Today

    If your income has taken a hit due to COVID-19, we can help you determine your best path forward.

    DebtCare Canada is operating 100% remotely. Contact us today for a free consultation. Call or text 1-888-890-0888 or visit www.debtcare.ca for more information.

  • Canadian Income Tax Filing Deadline Coming Up: What To Do If You Can’t Pay

    The new Canadian income tax filing deadline is coming up soon — on June 1, 2020.

    Is your return ready to file?

    Due to COVID-19, the income tax filing deadline was moved from the usual April 30 to June 1.

    If you owe, the deadline to pay has been moved to September 1, 2020.

    But can you get the money together in that time, or do you need extra assistance?

    Here’s everything you need to know.

    A) Don’t Delay Filing

    First, don’t delay filing your return. Even if you have lost your income due to COVID-19, you still need to file. If you miss the June 1 deadline and will owe, you may be charged a late-filing fee, which will only add to your final balance.

    It’s in your best interest to file by the June 1 deadline. If you will owe and can’t pay, read on…

    B)  If You Need To, Use the Three-Month Deferral Period to Gather Funds

    As we mentioned, this year you have three months to actually pay for what you owe. The deadline to pay your owed income tax return is September 1.

    Unlike in previous years, you will not be charged interest between the filing deadline of June 1 and the new payment deadline of September 1. So, if you need more time to collect what you owe, this break can give you that.

    But be sure that you will have the funds by September 1 (or sooner). If you can’t pay, you will be charged interest after September 1. Plus, if you don’t pay you will no longer receive any GST/HST credits or Canada child benefit payments from October 2020 forward and you’ll have to repay the estimated amounts that were issued to you starting in July 2020.

    If you won’t be able to pay, read on.

    C)  If You Know You Can’t Pay, Explore Your Options

    If you will not be able to pay by September 1, you need to act now.

    A debt consultant (like DebtCare Canada) will review your situation to help you find the best option for you. This might include:

    • Cleaning up other debts to free up money for your tax payment.
    • Accessing home equity to pay what you owe.
    • Filing for insolvency (bankruptcy or a consumer proposal).

    DebtCare also provides access to one of the only programs that can resolve a CRA back tax problem.

    In this program:

    • Your principal tax debt can often be reduced.
    • Interest and penalties immediately stop.
    • You are able to make a single monthly payment.

    Don’t wait to explore your choices. The sooner you start, the more options you will have.

    At DebtCare Canada, we offer a free consultation to deal with tax problems. Tax evasion is illegal. Get ahead of your tax issues.

    Contact us by calling or texting 1-888-890-0888 or visit www.debtcare.ca to learn more.

  • Bankruptcy and Consumer Proposal Filings Decreased in March 2020… Or Did They?

    Canadian insolvency statistics — the number of people who file for bankruptcy or for consumer proposal in a month or year — give us a good insight into the state of consumer and business debt in our country.

    The March 2020 insolvency numbers are particularly interesting as this was the first month that our national economy was significantly affected by the novel coronavirus (COVID-19) pandemic.

    In March, public health measures shut many businesses, schools, and public gatherings down. The Canadian Centre for Policy Alternatives reported on March 25 that two million Canadian workers had been laid off or were at “immediate risk” of lay off as a result of the public health measures. The Globe and Mail reported that between March 15 and March 20, Employment and Social Development Canada received about 500,000 applications for employment insurance (EI).

    But what was the impact on insolvencies?

    The Office of the Superintendent of Bankruptcy Canada released the March 2020 statistics this week. At first glance, it actually looks like Canadian insolvencies decreased from February 2020 to March 2020 — and from March 2019 to March 2020.

    • The total insolvencies filed went from 11,575 in February 2020 to 11,198 in March 2020 — a decrease of 3.3%.
    • They went from 12,325 in March 2019 to 11,198 in March 2020 — a decrease of 9.1%.

    However, as we dig into the numbers further, we can see that this decrease isn’t quite what it appears…

    A Closer Look at March 2020 Insolvencies in Canada

    When we break down the March 2020 numbers by province, things get much more interesting.

    Some provinces did see a big drop month-over-month and year-over-year. For instance, Newfoundland and Labrador went from 289 insolvencies filed in March 2019 to 228 filed in March 2020 — a decrease of 21.1%.

    But other provinces actually saw increases — some of them quite significant.

    Alberta, for instance, had 1,402 insolvencies filed in February 2020 and 1,491 filed in March 2020 — an increase of 6.3%.

    And when we look at consumer proposals year-over-year, we see another rising trend. Albertans filed 964 consumer proposals in March 2019, but 1,081 in March 2020 — an increase of 12.1%.

    We can see some similar trends happening in other provinces, such as Ontario, Manitoba, and New Brunswick:

    • In Ontario, the number of bankruptcies filed increased from February 2020 (1,066) to March 2020 (1,105) — a rise of 3.7%.
    • In Manitoba, the number of bankruptcies filed went from 69 in February 2020 to 79 in March 2020 — an increase of 14.5%.
    • In New Brunswick, bankruptcies filed went from 137 in February 2020 to 173 in March 2020 — an increase of 26.3%.
    • Not only that, but New Brunswick also saw a rise in consumer proposals filed. In February 2020 there were 2019 proposals filed and in March 2020 there were 236 — a rise of 7.8%. This also increased year-over-year, going from 193 in March 2019 to 236 in March 2020 — a rise of 22.3%.

    What Does This Mean for Debt?

    While it appears positive that insolvency filing numbers did not skyrocket during March 2020, this could be a false positive.

    The decreases in filings could also be related to several alternate factors, including:

    • Insolvency filings increased in February by 2.1% month-over-month, which could indicate that people who were already close to the brink filed earlier and did not need to in March.
    • In March, as the COVID-19 pandemic came on, we saw many economic measures come into place, such as deferring bills or payments, which could lessen the debt burden — or at least buy some time. (Find out the truth about debt deferrals or suspensions.)
    • It may also have just been too early for the true economic impacts to be known. Some of the public health measures that affected income and jobs did not come into place until the second half of March, or even closer to April.
    • People struggling may also have turned to other debt management solutions first, such as using home equity or consolidating payments.

    The increases that we did see show that there are still people struggling — and March may only be beginning. It will be interesting to see what the April 2020 statistics bring.

    What to Do If You are Struggling Financially

    If you are dealing with a high debt load, or worried about making ends meet due to COVID-19 impacts, you might be thinking about filing for bankruptcy or a consumer proposal.

    If you do, you need an advocate on your side. A debt counsellor, like the ones at DebtCare Canada, will help evaluate all of your financial options. If you decide to file, we will make sure that you are protected, and your best interests are kept in mind throughout the process. (See how a trustee in bankruptcy is different from a debt counsellor.)

    Learn more about our services and solutions today. DebtCare Canada is open 100% remotely during the COVID-19 pandemic. Reach out to us by phone or text at 1-888-890-0888 or visit www.debtcare.ca.