debtcare.ca

Author: mgoldenberg@debtcare.ca

  • Don’t Wait Too Long to Refinance Your Mortgage – Get Ahead of Rising Interest Rates

    If you’re interested in refinancing your mortgage, it’s better to act sooner rather than later.

    Why? Let’s break down the reasons.

    1. New Canadian mortgage regulations are making it harder to access financing.

    On January 1, 2018, the Canadian government implemented new mortgage rules onto federally-regulated lenders (such as banks). These lenders now have to implement a mortgage “stress test” on potential homebuyers, and those seeking mortgage refinancing.

    What this means is that if you were to get a new mortgage, or refinance an existing one, a federally-regulated lender would need to test your ability to afford the mortgage against a higher mortgage interest rate.

    If you had a mortgage rate of 3%, they might have to test your ability to pay against a 5% rate, for instance. They are also required to take your total housing-related debt (Gross Debt Service ratio – or GDS) and your total overall debt (Total Debt Service ratio – or TDS) into account.

    However, non-federally regulated lenders, like credit unions and private mortgage lenders, are not subject to the mortgage stress test regulations. Unlike big banks, they aren’t required to stress test your mortgage refinancing or take your GDS and TDS into account – but that could be changing.

    Earlier this year, a Reuters article cited three unnamed federal sources who said that the Canadian government is considering extending the stress test regulations to private lenders. This means that non-bank mortgage lenders would be required to use the same measurements for extending mortgage financing as the big banks.

    Canadian Finance Minister Bill Morneau denied the rumours, but the possibility is still there – and if it does happen, you’ll want to be prepared. Which is reason #1 why it may be better to seek mortgage refinancing now, rather than later.

    1. Property values are declining.

    Reason #2 has to do with value of your property. If you’re refinancing, you likely want to access the most equity possible.

    Unfortunately, home prices are rising slowly, perhaps due to the impact of the mortgage stress test and Canadian interest rate increases. And less homebuyers are able to access the market.

    More than 100,000 Canadians have been kept out of the housing market due to the stress test regulations, according to Mortgage Professionals Canada.

    If you’re thinking of refinancing your mortgage and this trend continues, it might mean that your property value could drop, too. And if private lenders are subjected to the same regulations, it could mean even less people entering the housing market – and even further property value declines.

    1. Mortgage rates are rising.

    Five-year fixed rate mortgages reached their lowest point in late 2016, according to Rate Hub. Since then, mortgage rates have gone up about 0.5% per year. At the beginning of 2019, the lowest fixed rates were around 3.29%.

    Variable mortgage rates are also on the rise (and subjected to Canadian interest rate increases).

    “Even with discounting, the best five-year variable mortgage rates are still up about 0.75% since this time last year,” says Rate Hub.

    The moral of all this is that if you’re considering mortgage refinancing – don’t wait.

    At DebtCare Canada we offer first mortgages, second mortgages, home equity lines of credit, and more.

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

  • Housing Affordability Crisis in the GTA: How to Find Other Savings in Your Budget

    Housing affordability in the GTA is close to the worst it’s ever been.

    According to the RBC Housing Trends and Affordability report, a household in Toronto would need 66% of its income to cover housing-related expenses. And the difficulties continue whether you’re looking to own a home or rent.

    • First-time homebuyers have to pay a higher cost to get into the housing market in the first place. Even relatively more affordable options, like condos, have gone up in price recently.
    • Renters are paying more in rent. According to RBC, rental rates in Toronto have gone up 4.4% in the past three years.
    • Even GTA residents who already own a home may be struggling as housing costs go up or if they are scheduled for mortgage renewal.

    Whether you’re a renter, shopping for your first home, or a homeowner, the housing affordability crisis likely isn’t going away anytime soon – but there are solutions to be found in your own pocket.

    These money-saving tips can help you put more into your housing budget, save for a down payment, or pay off debt that may be affecting your ability to get a mortgage.

    Here’s what we recommend:

    1. Get a roommate.

    If you are currently renting, you may already have a roommate. But if you don’t, finding one can be a good way to save on costs – especially if you are hoping to save up to buy a house.

    If your rent is $2,000 per month and you split that in half with a roommate, you’d be saving $1,000 each month – or $12,000 each year.

    Even current homeowners may benefit from having a roommate to share housing costs or looking into co-ownership, where two or three friends buy a house together. While you may have less privacy, you’ll be able to afford more home.

    1. Negotiate your lease or mortgage renewal.

    For tenants, you may be able to work out a deal with your landlord. If you’ve been a good tenant and have a history of paying your rent on time and in full, your landlord may be keen to keep you. You might be able to negotiate a break on rent for your good behaviour, or for doing something extra in the complex – like shovelling the driveway in the winter.

    For homeowners, when time comes for your mortgage renewal, ask your broker or lender if there is a way to save on your rate. You might benefit from a lower rate or by switching to a fixed-rate mortgage vs. variable-rate. If your renewal has already passed, consider looking into mortgage refinancing instead.

    1. Look for savings in your other bills.

    Like it or not, 66% doesn’t leave much room for other expenses. But if you can’t reduce the 66% any further, you may be able to cut back on the 34%.

    Look at all of your bills – not just the housing-related ones – with a fine-toothed comb. Do you need a subscription to HBO Go and Netflix? Are you paying for services you no longer use? Can you switch from brand-name groceries to generic? Are you paying pricy service fees for your bank account? Can you walk or bike in the summer instead of taking the TTC?

    While these potential savings may be relatively small, they can really add up. And if your goal is to own property in the next few years, they might be what makes the difference in down payment or shortens the homeownership timeline. It’s all about priorities.

    1. Focus on paying down debt.

    Debt is bad for your budget in two ways. First, having more debt means more payments each month. If you have $9,000 in credit card debt, for example, and are always making the minimum payment, you’re going to be paying it off for a very long time as interest adds up. And that money could be going to other things in your budget – like your mortgage or savings for a down payment.

    But the second reason that debt can hurt housing affordability has to do with lender regulations. Federally-regulated lenders in Canada (the big banks) have to assess your current debt levels when you go to them for a mortgage or refinancing. If you have too much housing-related debt (known as the Gross Debt Service ratio – or GDS) or too much total debt (known as the Total Debt Service ratio – or TDS) you’re going to have a much harder time getting a mortgage – if you can get one at all.

    Paying down your high-interest debt like credit card bills, a line of credit, student loans, etc. quickly is in your best interest, both to save more money and to improve your chances of getting a mortgage or a better rate on renewal.

    You might consider:

    • A debt consolidation loan, like the ones offered by DebtCare Canada.
    • If there is a lot of debt, filing for a consumer proposal or for bankruptcy.

    The housing affordability crisis in the GTA is making it difficult for renters, house hunters, and homeowners alike – but there are savings to be found.

    At DebtCare Canada, we offer financial help to people with all types of credit and income. Ask us today about our debt relief program or our loans and mortgages.

    Call 1-888-890-0888 or visit www.debtcare.ca.

  • April Showers Bring May CRA Tax Debt… April 30 is the Income Tax Deadline

    The 2018 Canadian income tax deadline is almost here. On April 30, 2019, all personal taxes must be filed for the 2018 tax year. If you miss this deadline, you will officially be a late filer in the eyes of the Canada Revenue Agency (CRA).

    When you file taxes late, and you owe a balance, not only will you still have to pay the principal tax debt, but you’ll also have to cover interest and penalties. These additional costs can add up quickly.

    In 2019, here’s what you could end up owing:

    Interest

    • The CRA charges compound daily interest starting May 1, 2019, on any unpaid amounts owing for 2018. This includes any balance owing if the CRA reassesses your return. In addition, the CRA will charge you interest on the penalties starting the day after your filing due date. The rate of interest the CRA charges can change every three months.
    • If you have amounts owing from previous years, the CRA will continue to charge compound daily interest on those amounts. Payments you make are first applied to amounts owing from previous years.

    Late-Filing Penalty

    • If you owe tax for 2018 and you file your return for 2018 after the due date of April 30, 2019, the CRA will charge you a late-filing penalty of 5% of your 2018 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.
    • If the CRA charged a late-filing penalty on your return for 2015, 2016, or 2017, your late-filing penalty for 2018 may be 10% of your 2018 balance owing, plus 2% of your 2018 balance owing for each full month your return is late, to a maximum of 20 months.

    Repeated Failure to Report Income Penalty

    • If you failed to report an amount on your return for 2018 and you also failed to report an amount on your return for 2015, 2016, or 2017, you may have to pay a federal and provincial or territorial repeated failure to report income penalty.
    • If you did not report an amount of income of $500 or more for a tax year, it will be considered a failure to report income.
    • The federal and provincial or territorial penalties are each equal to the lesser of:

                 – 10% of the amount you failed to report on your return for 2018;  

                 – 50% of the difference between the understated tax (and/or  overstated credits) related to the amount you failed to report and the amount of tax withheld related to the amount you failed to report.

    If you owe a tax debt that you won’t be able to pay, the right answer is to file anyway.

    Once you are filed and have your assessment, you’ll need to deal with the tax debt. This is also best to do before the April 30, 2019 deadline.

    If you can’t pay, get in contact with a debt consultant that has a CRA-specific program. For example, at DebtCare Canada, we have access to one of the only programs in Canada that can resolve a CRA back tax problem. We also have other financial solutions, like debt consolidation, home equity financing, and insolvency filing options.

    It can’t be reiterated enough — do not miss the Canadian tax deadline.

    For a refresher, here are the 2019 filing dates:

    • April 30, 2019: filing deadline for personal income tax.
    • June 17, 2019: self-employed or sole proprietor tax filing deadline.*

    *A note for those who are self-employed: while technically the filing due date for sole proprietors isn’t until June 17, the CRA will begin charging interest on any amounts owing on May 1, 2019. Therefore, it is also in your best interest to file before April 30, 2019.

    Have questions about filing or dealing with a tax debt? DebtCare Canada is here to help.

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

  • Liberty Tax Filers – What to Do if You Will Have a Tax Debt You Can’t Pay?

    It’s income tax season and many Canadian filers may be turning to online tax preparation services, like Liberty Tax.

    These services are great options for submitting your income tax return, and for finding more deductions and rebates you may not have known about. But what happens if you’re assessed with a tax debt that you can’t afford to pay?

    Online tax preparation services like Liberty help you file your taxes – but they don’t help you avoid CRA collections.

    If you owe a tax debt that you can’t pay, either through filing with an online tax service or with an accountant, here are some best practices to keep in mind:

    1. File even if you can’t pay.

    If you know you will owe a tax debt, file anyway before the income tax deadline of April 30. Not filing will only makes things worse.

    If you don’t file, you can be assessed with failure to file penalties, and even be charged with tax evasion.

    It’s better to get your return in and look into options for how to clear the tax debt, instead of just letting it fester.

    2. Seek outside tax help.

    While online tax services like Liberty are good tools for filing your return, they are not debt consultants. Case in point: at our last check, Liberty Tax Canada didn’t appear to have a dedicated resource page about owing a tax debt.

    Even if you use a tax service to get filed, the best people to help with an outstanding tax debt are, of course, people who understand debt. Even if you work with an accountant to get your taxes filed, the accountant will not necessarily have access to tax debt resources.

    Instead, you want to seek advice from an experienced tax debt consultant, preferably one like DebtCare Canada with a specific program for dealing with the Canada Revenue Agency (CRA).

    3. Don’t negotiate with the CRA on your own.

    The CRA offers options to negotiate a payment plan and even has some debt forgiveness programs for outstanding interest and penalties. While these can help do not attempt to use them alone.

    This is because the CRA can take the information you provide through these programs and use it to start collection action. For example, if you fill out a financial disclosure form with your banking information, the CRA now knows where you bank and can decide to freeze your account if you miss a payment.

    It’s far better to work with a CRA negotiating specialist.

    4. Look for ways to pay the outstanding tax debt.

    Ideally, it’s better to not owe the CRA at all. So, if you know that you will owe a tax debt you can’t afford to pay, you would (generally) be better off financially taking out a loan or accessing home equity and paying the CRA with that money, and then owing the lender instead of the CRA.

    This is because CRA collection action is so much more aggressive than what the majority of creditors can enforce.

    Also, many lenders will arrange a fixed payment plan, so you can plan out repayment in a realistic timeframe with realistic terms. The CRA may not do the same.

    5. Consider debt consolidation options.

    What can you do if you can’t get a loan big enough to cover the tax debt? The answer here lies in debt consolidation.

    If you have too much debt to qualify for a loan, or a bad credit history, you might look into debt consolidation options, or filing for insolvency.

    Filing for a consumer proposal or for bankruptcy effectively takes care of your unsecured debts by declaring that you are unable to pay them.

    In a consumer proposal, you make a settlement proposal to your creditors – including the CRA. If accepted by the majority of your creditors, your unsecured debts are paid for with a lesser amount. You must be able to prove that your creditors will get more money this way than if you were to file for bankruptcy. In a consumer proposal, there is a debt limit of $250,000 (not including your mortgage).

    If you have more than $250,000 in debt, you might consider a different kind of proposal, or filing for bankruptcy. In a bankruptcy, your assets are often sold to make up the debt owed.

    While filing for insolvency is often not the first choice, it’s a better option than owing a tax debt to the CRA. If you owe a tax debt, the CRA can start collection action – which could include wage garnishments, freezing bank accounts, liens on assets, and in some cases even criminal charges.

    Also, if you wait to pay your tax debt, you will be charged even more because you’ll start to incur interest and penalties.

    If you file your taxes through an online service, like Liberty Tax, remember to:

    • File your taxes on time.
    • Reach out to a debt consultant if you can’t pay.

    At DebtCare Canada, we provide access to one of the only programs in Canada that can resolve a CRA tax problem. We can help you deal with your tax debt quickly.

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

  • Bank of Canada Interest Rate Stays at 1.75% for March 2019

    The Bank of Canada interest rate is staying at 1.75% for March 2019.

    On March 6, 2019, the Bank of Canada (BOC) announced they are maintaining the overnight interest rate for the time being.

    Their reasons were:

    • The slowdown to the global economy has been worse than the BOC predicted – including trade tensions and uncertainty.
    • In Canada, consumer spending is down despite employment growth. Essentially, people are spending less but earning more.
    • The housing market is also down.
    • Business exports and investments have fallen short of expectations.

    The next BOC announcement is scheduled for April 24. Between now and then, the BOC will be closely watching “developments in household spending, oil markets, and global trade policy.”

    What This Means for You

    At first glance this is good news – no interest rate increase means more time to deal with outstanding high-interest debt.

    But there is some information that could be concerning.

    1. Housing Affordability

    According to the BOC, Canadians are earning more but spending less. At the same time, the housing market is softening – so many homeowners may be locked out of the market or have their home equity drop.

    Housing affordability in Toronto, Vancouver, and other major cities has been making headlines recently. Having a bigger paycheque may not mean much if your expenses are still rising.

    What to do if you’re worried about your property value or accessing mortgage financing:

    Talk to a financial counsellor about your home equity position and what your options are. For instance, at DebtCare we offer first mortgages, second mortgages, home equity lines of credit, and more.

    2. Unstable Employment

    There have also been headlines about precarious employment – meaning more people have jobs, but those jobs are not necessarily stable income. They may be temporary contracts or have fluctuating hours. In these cases, it can be hard to plan for, and stick to, a budget.

    If you’re worried about stable income:

    Talk to a financial consultant about creating a flexible budget that works for you and about financing for slower periods.

    3. Household Debt

    The third factor that might be at play is many Canadians are using any extra income to pay off debt. Canadian household debt reached a new high in 2018 — over $2.16 Trillion. When you have high levels of debt, it can be hard to pay it all down. This often causes a vicious cycle of paying for the same bills over and over, especially if you are only making the minimum payment each month.

    If you’re worried about household debt:

    Talk to a financial consultant about your debt management options. Debt consolidation, home equity, or insolvency filing options – like filing for a consumer proposal or for bankruptcy – can help deal with problem debt in a sustainable way.

    Get your finances on track before the Bank of Canada announcement on April 24. DebtCare Canada can help.

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

  • CRA Director Liability and You – Protect Yourself!

    CRA Director Liability and You – Protect Yourself!

    CRA Director Liability and You – Protect Yourself Before It’s Too Late!

    If you own, or are a director for, a company and accept trust money for the federal or provincial governments, you could be subject to CRA director’s liability.

    CRA Director Liability

    CRA director liability means that the Canada Revenue Agency (CRA) can decide that you owe a tax debt for your business – personally.

    Like anything, director’s liability is a process and there are ways that you can protect yourself if you’re assessed.

    Here’s what you need to know.

    What is CRA Director’s Liability?

    In Canada, incorporated businesses are considered separate legal entities from the owners’ personal assets and liabilities. If any debt is accrued by the incorporated business, the employees, officers, and directors are not held personally liable.

    However, this isn’t always the case – also known as director’s liability.

    If the CRA can’t collect an amount owing from the business directly, it may enforce director’s liability and assess the director, or directors, personally. This is most common with unremitted GST/HST trust money or unpaid payroll source deductions.

    What Happens if You Receive a Director’s Liability Assessment?

    If you are subject to director’s liability and can’t pay, the CRA might place liens on your assets, freeze your bank account, garnish wages, and more. And they can do this even if the corporation is no longer operating.

    If you are, or ever have been, the director of a corporation with a CRA tax problem, you need to act fast.

    How to Protect Yourself

    1. Do your due diligence.

    In the event that you are the subject of a director’s liability assessment, paperwork is your ally.

    If you can prove that you made your best efforts to have the corporation pay the GST/HST remittance or other deduction, then you may have a chance of having it overturned.

    According to Mondaq:

    “There is also a “due diligence” defence available to taxpayers who are assessed for CRA director liability by Revenue Canada. Subsections 227.1(3) of the Income Tax Act and 323(3) of the Excise Tax Act contain identical wording which states that a director is not liable for a corporation’s failure to collect GST/HST or Payroll Source Deductions if they “exercised the degree of care, diligence and skill to prevent the failure that a reasonably prudent person would have exercised in comparable circumstances”.

    However, this solution will likely require a tax lawyer and could end up costing more – especially if the circumstances cannot be proven.

    2. Make note of your resignation date.

    If you’ve resigned from the corporation, or are planning to resign, make sure the date is well-documented. This is because, in many cases, there has been a precedent set of a two-year limitation period.

    According to Lerners, many of the statutes that impose liability on a director have a two-year limitation period. For example, a claim for unpaid wages against a director under the Employment Standards Act, a claim for which there is no due diligence defence, cannot be made more than two years after a director resigns.

    However, if a director resigns on paper but continues to act like a director, then the two-year time limit is void. In addition, the resignation needs to be clearly stated. Lerners recommends being on the public record with your resignation and its effective date.

    “When government officials are considering an assessment against a director, the first place they check is the public record,” Lerners notes. “You do not want to be in the position where you receive a letter proposing to assess you personally when you resigned years before, but your resignation was never properly noted on the public record.”

    Again, this solution would most likely require a tax lawyer.

    3. Find solutions for the tax debt.

    There may be an event where you are being assessed for director’s liability and cannot afford to work with a tax lawyer or don’t have a defense available.

    In these cases, a CRA director liability assessment can be dealt with in the same ways as personal tax assessments: by making a plan for the debt.

    The CRA wants their money and you may have to pay it – so the solution becomes finding a way to raise the funds. This might include:

    • Taking out a secured loan.
    • Accessing home equity.
    • Insolvency options, like filing for a consumer proposal or personal bankruptcy.

    If you owe a director’s liability and know that you can’t pay it all, even if you use home equity or a loan, insolvency filing options may be the answer. When you file for a consumer proposal or personal bankruptcy, your unsecured debts — including tax debt — are included.

    This is the only way, besides paying the debt in full, to stop CRA collection action, such as requirements to pay, frozen bank accounts, and liens against your assets.

    Whether you decide to pursue litigation or deal with the CRA director liability tax debt directly, DebtCare Canada can help. We’ll go through your options and find the best way to stay protected.

    Do you have a CRA director liability, call 1-888-890-0888 or visit www.debtcare.ca for a free consultation.

  • 10 Better Budgeting New Year’s Resolution Ideas

    It’s been 2019 for more than a month — so why are we writing about New Year’s resolutions in February?

    Did you know that only 8% of people actually stick to their New Year’s resolutions — and 80% of resolutions fail by the second week of February?

    If you are in this boat, it’s not too late. You can still meet your goals, or even create new ones if you didn’t set any in January. But the key is to make smarter resolutions that will last through the whole year.

    Financial resolutions are great goals to set. Little, daily actions can add up to big successes in the long run. Here are 10 New Year’s (or any time of year) resolution ideas you might consider for 2019 — and ways to stick with them:

    1.Create a budget and update it monthly.

    Why it works: By reviewing your budget monthly, you will see how your goals are progressing. You’ll also be able to see where you need to tweak and plan for the month ahead.

    Make it stick: Set aside a day each month for your review — like the 1st of the month. Create a calendar reminder on your phone.

    2.Track your expenses.

    Why it works: You’ll be raising awareness about how you spend your money. Just by tracking alone, you’ll be able to see patterns crop up.

    Make it stick: Download an app that connects to your bank account to make the tracking automatic. Plus, some apps allow you to sync your budget, so you can see when you’ve gone over a category.

    3.Set up automatic withdrawals into a savings account.

    Why it works: You only have to act once, and you’ll have your resolution completed! This can be a great way to put money aside for a rainy day or for a specific savings goal.

    Make it stick: Every time you have “found money” or get bonus money, add it to your savings account.

    4.Set up an RRSP or (if you already have one) make your contributions automatic.

    Why it works: Similar to the savings account, this is a one-and-done resolution. Once you have your RRSP set up, figure out how much you can put in and then make it automatic. The benefits of an RRSP are numerous and starting to save early can set you up for success in the long run thanks to compound interest.

    Make it stick: Have a garage sale (or online garage sale through a marketplace site) and add all the revenue to your RRSP.

    5.Pay off debt every day.

    Why it works: Author Jeff Olson calls this “the slight edge” — the small, consistent actions that you take every day. What you do every day is often more effective than what you do once in a while.

    Make it stick: Rather than focusing on the total sum of your debt, break it down into manageable chunks and resolve to pay off each chunk in little payments every day (you can even set this up to be taken from your bank account automatically). Just putting $5 per day towards your debt will add up to $150 in a 30-day month and it will hurt a lot less to see it go in $5 increments than a $150 lump sum.

    6.Pay more than the minimum balance on your credit cards.

    Why it works: Some people think that the minimum payment is all they have to pay, but unfortunately this isn’t always the case. Paying only the minimum doesn’t mean you have good credit. Instead, resolve to pay your credit card bills in full every month and not to charge more than you can afford to pay.

    Make it stick: Consider putting a cap on your credit card accounts or signing up for a secured credit card that acts like a debit card but reports to your credit agency.

    7.Plan for your taxes.

    Why it works: While income taxes aren’t due until the end of April, you can start getting organized now. Sort your receipts and other important documents so you won’t have to scramble at tax time.

    Make it stick: Pick up a cheap accordion file and label each section as a different category that you claim on your income tax. Keep this file by the front door and drop receipts, paystubs, etc. in as soon as you get home.

    8.Pack your lunch.

    Why it works: If you are buying lunch out every day, those costs can really add up. If your lunch costs $8, five days a week, that would work out to $2,000 extra per year assuming that you work 50 weeks and keep to your budget every day.

    Make it stick: Cook extra dinner the night before and take the leftovers for your lunch. This will avoid the before-work scramble and save you money.

    9.Set up a grocery delivery service.

    Why it works: We have all had that experience where we’ve gone to the grocery store with a list of only a couple items and come out with an entire cart’s worth of food. Eliminate this by looking into online grocery shopping in your area. Many Canadian grocers are offering it now and the delivery fees are often minimal, or even waived if you spend over a certain amount.

    Make it stick: Do your online grocery shopping right after dinner when you’re not hungry. If you do continue going to the store, eat a snack before you shop. Studies show we buy more when we’re hungry!

    10.Make an appointment with a debt counsellor.

    Why it works: Debt counsellors are experts at making a plan to deal with high-interest debt — the kind of debt that ends up costing you more in the long run. If you’ve been resolving to get a handle on your debt for years with no forward action, take the step to ask for help.

    Make it stick: Tell a trusted friend you made this appointment. Research shows that people are more likely to follow through with something if they have told others they are doing it.

    At DebtCare Canada, we’re here to support all of your financial resolutions. We’ll help you make a budget, track your expenses, plan for savings goals, and deal with debt.

    Contact us today to get started. Call 1-888-890-0888 or visit www.debtcare.ca.

  • What You Should Know to Be Financially Prepared for 2019

    Make a Personal Finance Plan for Higher Interest Rates, Mortgages, Line of Credit Payments, and More

    The new year is upon us. Do you have a personal finance plan for 2019?

    The Canadian economy is changing. We have already seen the effects of this in 2018. Canadian consumer debt is staying at high levels — Canadians owe more than $2.13 Trillion in debt —and interest rates are continuing to rise.

    The same tactics that used to work for managing your finances may not cut it for 2019.

    When interest rates were at all-time lows, if you wanted to renovate your house, it might have made sense to take out a purchase line of credit (PLOC). But rising interest rates mean both higher mortgages and line of credit payments, so this may not be a practical choice any longer.

    The housing market may continue to cool, so home value could decline — meaning it is possible that you will not be able to access as much home equity.

    Plus, if you are using lines of credit with variable interest rates, you may find yourself paying more over the long run, especially if you are already carrying other debts.

    Going into 2019, you should have a plan for your debt — a personal finance plan.

    First, ask yourself these questions:

    1. What debts am I currently carrying?
    2. Are there any that will fluctuate with interest rates (credit card debt, lines of credit, unsecured loans, etc.)?
    3. If so, is there a way that I can consolidate debt now before interest rates increase again?

    Then consider your home equity.

    And, finally, look at what is on the horizon for 2019 (and beyond):

    • What financial projects am I hoping to complete in 2019?
    • What big savings goals are coming up in the next five years? Ten years? (Retirement, kids going away to school, relocating, etc.)
    • How much will I need for those goals and what is the best way to finance them?

    When you know the answers to these questions, you can make a budget for the year ahead and stay on the right financial track.

    There have been several interest rate increases already, and economists are predicting even more in 2019. Waiting and seeing could prove dangerous if you are carrying a lot of debt.

    Even if you are not carrying a lot of debt, it may be in your best interest to think about big expenditures now rather than later. The new year is the perfect time to sit down and plan for the future. Be sure that your planning includes your personal finances!

    DebtCare Canada can help you make a personal finance plan that considers your entire financial position.

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

  • No Interest Rate Increase for January 2019: Time to Restructure Debt?

    There will be no interest rate increase this month, or in February 2019.

    The Bank of Canada (BOC) announced on January 9, 2019 that the overnight interest rate would remain at 1.75% for the time being – at least until the next announcement, scheduled for March 6, 2019.

    Reasons for the hold include the global trade economy (especially U.S.-China trade conflict); lower oil prices; and weaker-than-expected housing investment and consumer spending. Areas affected by oil production, like Alberta, may also struggle with consumer spending in the near future.

    There’s good news, too. The Canadian economy is doing well, the BOC said, with unemployment at a near 40-year low. Inflation is on target as well.

    And, of course, the hold is good news if you are carrying variable-rate debt.

    With nearly two months to go until the next BOC announcement, now could be a good time to restructure debt. But what does that mean exactly?

    If you are carrying $5,000 of debt on one credit card, $2,000 on another, and have a $10,000 line of credit, you might owe interest on all of those amounts. If interest rates increase again, because they have variable (non-fixed) interest rates, you’ll owe even more.

    But if you take steps to restructure debt – move it around or combine it – you won’t owe as much interest. Plus, you may even be able to restructure in a way that moves your debt to a fixed interest rate, meaning it won’t change with the BOC overnight rate.

    Options for debt restructuring include:

    • Accessing home equity.
    • Obtaining a debt consolidation loan.
    • Entering into a debt relief program.
    • Filing for a consumer proposal.
    • Filing for bankruptcy.

    Whichever route you choose, it’s best to act now, before interest rates rise again. The BOC has said more increases will likely be warranted in 2019, though they didn’t specify when. The best course of action is to get prepared now so when it does happen, you won’t have to worry.

    DebtCare Canada can help. Contact us today for a free consultation to go over your debt restructuring options, find financial relief, and more.

    Call 1-888-890-0888 or visit www.debtcare.ca.