debtcare.ca

Category: Blog

  • New Mortgage Rules Make Now the Best Time to Refinance to Consolidate Debt

    A few weeks ago, we discussed the current housing market and the fact that it seems to be cooling. This comes, many have argued, as a direct result of the Ontario government’s 16-point Fair Housing Plan. This plan, which attempts to bring about some balance to the housing market, comes on the heels of new mortgage rules introduced last year to help curb over-borrowing.

    What are these new mortgage rules? The most important, for borrowers, is with regard to stress testing. This means that borrowers must meet certain thresholds in order to qualify, not only at the current rate, but at higher rates to ensure payments will be met should interest rates increase – as many economists are predicting they will. The other changes have to do with restrictions on insuring low-ratio mortgages, capital gains and lender risk sharing.

    Amidst these major changes to borrowing and home ownership, many Canadians are being proactive and arranging for mortgage financing to meet current regulations while the market is still hot. Now is definitely the best time to refinance to consolidate debt.

    As of 2012, in order to refinance your mortgage, you need more equity – borrowers may only obtain a maximum loan of 80% of a property’s value. With the market already cooling, this could result in lower home values and thus less equity. With less accessible equity, a refinance that you qualify for today may not be available to you in the future.

    If you’ve been considering refinancing your mortgage to consolidate your debt, there are a number of important benefits. Not only will this result in a consolidation of the various monthly payments, it can also significantly reduce the overall interest you are paying each month compared to the high interest rates that often result in minimum credit card payments applying very little to the principal debt. It also means you have a set date for total repayment – you know when you’ll be debt free! It can also have a great impact on your credit report, showing positive repayment behaviour.

    So, if you are thinking about refinancing your mortgage while your home’s value is high, don’t wait. Strike while the iron is hot – before Canadian interest rates rise and the housing market cools.

    At DebtCare, we can help you choose the best mortgage refinancing option to suit your needs and your budget.

    Want to speak to someone today? Call us for a free consultation: 1 (888) 890-0888.

     

  • Things You Need to Know About Licensed Insolvency Trustees

    Fact: Consumer proposals and bankruptcies are two legal debt settlement options available through the Bankruptcy and Insolvency Act. Both processes can only be administered by a Licensed Insolvency Trustee (LIT). That being said, you do not have to go directly to a Licensed Insolvency Trustee for a consumer proposal or bankruptcy. In fact, you are better served with your own representation.

    This week, our aim is to clear up some of the confusion regarding Licensed Insolvency Trustees and how they work.

    When you’re struggling financially, are finding it difficult to make your monthly payments, or have missed several payments, there are numerous options that exist to help you regain control. Two of those options are a consumer proposal and bankruptcy.

    As mentioned, both must be administered by a Licensed Insolvency Trustee. However, the problem here is that, while LITs claim neutrality – they say they represent both parties (you and the creditor) – they have an obligation to maximize the return for the creditor.

    Does this make sense? Compare it to real estate. If you were buying a new home, would you want the same real estate agent representing you and the person selling their home to you? Since that agent is paid on commission, their goal would be to get as much money from you, the buyer, as possible. How can this result in a fair settlement?

    It is much the same with a consumer proposal, as the amount a Licensed Insolvency Trustee is paid depends on the amount of the proposal agreed upon. So, in a nutshell, the higher the proposal, and thus the more you have to pay, the more the LIT earns. So, if the LIT is getting paid according to the amount of the proposal, what is there to motivate them to get as small a proposal as possible.

    If you’re financially strapped, every cent counts. If you go directly to a Licensed Insolvency Trustee, you can’t be guaranteed the best deal. That can only be obtained through your own representation, someone who is hired by you to protect your money.

    Furthermore, if you go directly to a Licensed Insolvency Trustee you may only be given the option of a consumer proposal or bankruptcy, even if there are more valuable solutions out there, such as mortgage refinancing or even just a strict budgeting plan.

    At DebtCare, our goal is to get the best deal for you. We are here to protect you and only you. Want valuable advice and real protection?

    Call us today at 1 (888) 890-0888.

     

  • In The Know: Common Old Debt FAQs

    It is typical for us to receive at least a few calls a week about old debts. In an effort to address some of the most common questions, we thought we’d dedicate this week’s blog to answering a few of the ones related to old debts – questions we get, as mentioned, on a regular basis.

    Common Old Debt FAQs

    1. Does debt expire? No. If you don’t pay a debt, you will always owe it. Debt never just disappears from the record books.
    2. Is there a statute of limitations on taking action to collect a debt? Yes. This is where most of the confusion stems from. While old debts never expire, there is a statute of limitations for creditors on commencing action to collect a debt. In Ontario, if a creditor does not register a complaint with the court against you within that 2 year timeline, they lose the ability to enforce collections (wage garnishments, frozen bank accounts, property liens, etc.).
    3. What if a creditor registers a complaint before the 2 year timeline is up? Once the action is commenced, there is no statute of limitations and that creditor will be able to enforce collections on the debt, plus court fees, forever.
    4. Do creditors sell debts to collection agencies? Yes, while many creditors will engage collection agencies to collect debts on their behalf, if they do not take action to register a complaint with the courts within the 2 years of your default, they will often decide to sell that debt to an agency at a reduced rate in an effort to recoup at least a portion of their money. Once this happens, they wipe their hands of the debt.
    5. What happens if a collection agency buys an old debt? If a collection agency buys an old debt, their goal is to collect from you. This is often done through continuous contact attempts and threats to scare you. Many will agree to minimal repayment terms, stating after a payment is made they will stop calling. However, it is important to note that, once you make a payment, even if it is only $1, you reactivate the debt! If the 2 years has passed, and you agree to make a payment, this signifies a re-acknowledgement of the debt, removes the limitations on it, and gives them the ability to enforce collections.
    6. What should I do if a collection agency starts calling me about an old debt? Tell them that you know that the statute of limitations has passed and you know your rights. Advise them to stop calling you or you will call the police for harassment, which you have every right to do under the Consumer Protection Act.
    7. How will not paying an old debt impact my credit? While the statute of limitations means a debt more than 2 years old can’t be enforced as far as collections, meaning you don’t technically have to pay it, it does stay on your credit for 7 years. This can do serious damage to your credit report, making it difficult (if not impossible) to obtain new credit of any kind.

    If you’re concerned about an old debt that’s currently haunting you, or new debt that you just can’t seem to get a handle on, call DebtCare today to find out about the various options available.

    We’re here to help: 1 (888) 890-0888.

     

  • Differences Between Various Types of Debt Companies

    As a financial consulting company, we are often asked about the different types of debt companies. With several different types offering several different services, it is so important to know what these differences are. When you’re looking for solutions to a financial problem, ensuring you’re dealing with the right company is essential.

    Debt settlement companies. These types of debt companies have received a significant amount of bad press in recent years – and for good reason. While these companies claim to offer debt help, what they actually do is often far more dangerous. Most will tell you to stop paying your bills and instead they will collect your money to later settle your debts. Over time, as this money accrues in their account, your debts grow, and your credit is severely damaged. By the end of the agreement, you will likely have paid far more in fees, ruined your credit, and made your overall financial problems worse. What’s worse, many of these companies have gone out of business before ever releasing any money collected.

    Debt consultants. Debt consultants typically offer one service and that is to review your financials and then send you to a trustee for a consumer proposal or bankruptcy. If your debt is significant, sometimes a consumer proposal or bankruptcy is the best option. However, debt consultants will present them as the only ones, even if they don’t actually make the most sense, sometimes causing more harm than good.

    Financial consulting companies. These companies deal with a wide range of financial products and services and can help both those with major financial troubles as well as those with smaller financial issues. These companies don’t take the ‘one-size-fits-all’ approach and instead begin with a thorough examination of your circumstances to be able to offer the most valuable advice. Most will offer solutions such as mortgages, consulting, help with budgeting, even overall representation in addition to bankruptcies and consumer proposals. These companies are more concerned with ensuring you make the right decision for your circumstances – not their bottom line.

    When you’re struggling to meet your financial obligations and the stress is keeping you up at night, you need real help, help that will actually make sense. Financial consulting companies are there to ensure that you receive the advice and assistance you need, no matter what your situation is.

    When it comes to debt companies, don’t settle for anything less than the best. It is your money, protect it. DebtCare Canada is proud to be a financial consulting company that offers a wide variety of services to clients looking for debt help.

    Call us today for a free consultation: 1 (888) 890-0888.

     

  • Money Saving Tips for Back to School

    The summer is winding down and that means the back to school season is just around the corner. While most of us are probably reluctant to think about the relaxing summer days and warm summer nights ending, knowing the kids are headed back to the classroom often isn’t quite so bad! That being said, back to school spending can often put a damper on this exciting season for parents, and so we’ve compiled a list of some of the best money saving tips for back to school!

    Back to School Money Saving Tips

    See what you already have at home before you shop. Make a list of what your children need and raid the closet and supply room. Most of what you need is probably already tucked away somewhere in your home, and thus doesn’t need to be purchased again!

    The local dollar store is your best friend. Sure, those big box office supply stores may seem like the most likely place to find everything your child needs for back to school supply-wise, but of course these places charge far more. Instead, check out your local dollar store for all the same items at much lower price points. You can even turn this into a fun summer activity to beat the boredom by having your kids decorate those items to make them unique.

    Set a budget and stick to it. This is the most important tip. When you set a budget based on what you can afford to spend, and stay within its confines, you don’t run the risk of going overboard or finding yourself strapped when other payments roll around. Let the kids know the budget exists, and that this year a few main items, rather than a whole new wardrobe, is the name of the game.

    Buy in bulk. Making lunch every day can get expensive, so spending a little more upfront can sometimes save you a bunch down the road. Granola bars, juice boxes, fruit snacks – these are all easy to buy in bulk and store at home for easy lunch additions. Be sure to compare the price and volumes of bulk items. Sometimes the savings will surprise you!

    The school year costs money, so start saving for field trips and extra-curricular activities now. Whether your child plays sports, a musical instrument, or is into art or dance, those things cost extra money. So do the numerous field trips and school lunches. By putting away a little each week, starting at the beginning of the year, you won’t feel so strapped when the events come up since you’ll have a little bit of extra cash stashed away just for the occasion.

    For many parents, the back to school season can be almost as expensive as the holiday season, so this year take these back to school money saving tips to the bank and save!

    Finding yourself concerned even with these tips? At DebtCare, our goal is to help you establish financial security no matter what your current situation is.

    Call us today for a free consultation. 1 (888) 890-0888.

     

  • Collection Agencies and The CRA – Do You Know Your Rights?

    Collection Agencies and The CRA – Do You Know Your Rights?

    When you owe money, whether to a creditor or the Canada Revenue Agency (CRA), this knowledge can be stressful. If you can’t pay and are being contacted regarding the debt, that stress is likely to increase tenfold. However, there are limits, and if a collection agency or the CRA is becoming more aggressive than you’re comfortable with, know that you have rights and are protected.

    Collection Agencies

    Collection agencies in Ontario are regulated by the Consumer Protection Act and their activities must adhere to certain guidelines.

    Before any contact occurs, a collection agency must first send you a written notice through regular mail notifying you of the person or business that says you owe them money, the amount you owe, the name of the collection agency and a statement that the creditor has asked them to collect the debt. Only after this has been sent can you be contacted, and not for at least 6 days after the notice has been sent.

    Here are some of the things a collection agency can’t do:

    • Contact you on a Sunday, except between 1 pm and 5 pm
    • Contact you on any other day of the week between 9 pm and 7 am
    • Contact you on a holiday
    • Use threatening, profane, intimidating or coercive language
    • Use undue, excessive or unreasonable pressure or harass you
    • Charge you any fees

    If you feel as though your rights have been violated by a collection agency, you have every right to file a complaint. You can find out more information about your rights and how to file a complaint here: https://www.ontario.ca/page/filing-consumer-complaint.

    The CRA

    The CRA is considered very different from collection agencies. That being said, their activities must also follow a strict set of guidelines. They are required to treat you with respect and integrity, and there is an entire Taxpayer Bill of Rights which outlines the rights of individual taxpayers when dealing with the CRA.

    Some of these rights include:

    • The right to privacy and confidentiality
    • The right to service in both official languages
    • The right to be treated professionally, courteously, and fairly
    • The right to complete, accurate, clear, and timely information
    • The right to lodge a service complaint or request a formal review without fear of reprisal

    The entire Taxpayer Bill of Rights, as well as the steps to take if you feel your rights have not be respected, can be found here: http://www.cra-arc.gc.ca/E/pub/tg/rc17/rc17-12-16e.pdf.

    At DebtCare, we often receive calls from individuals requesting information about their rights as far as collection agencies and the CRA are concerned. No matter what, you should never feel harassed or disrespected. If you’re currently dealing with a debt that is being enforced, we can help you better understand the various solutions.

    Call us today for a free consultation: 1 (888) 890-0888.

  • Toronto Housing Market Cooling? Now’s the Time to Get Mortgage Financing Locked Down

    Back in April, after much discussion and prompting from outside sources, the Ontario government instituted several measures to cool a continually hot Toronto housing market. These measures are an attempt to temper rising prices which are becoming more and more prohibitive for the average Canadian and to reduce the impacts of a potential crash.

    As noted in a recent CTV News article, “the 16-point Fair Housing Plan to tame the Greater Toronto Area’s expensive real estate market, including measures such as expanded rent control and a foreign buyers’ tax,” has already had an impact.

    Furthermore, back in June, the Toronto Real Estate Board reported that “active listings in the GTA surged 42.9 per cent from a year ago and sales plunged 20.3 per cent in May compared to the same time last year. Although the average selling price for all properties for the month of May was $863,910, up from $752,100 last year, it was still down from $919,614 in April, according to the real estate board.”

    The data suggests that a cooling has already started and is likely to continue. With the market cooling, now’s the time to think about getting mortgage financing locked down.

    Why? As it currently stands, the Toronto housing market supports high home values. However, if it continues to cool and home values fall, homeowners will have less home equity to take advantage of.

    This is a particularly sensitive issue for those considering refinancing to consolidate debt – an option which has become very popular with the current housing values. More equity typically means more access to funds in order to consolidate, and often a better interest rate.

    Moreover, if Canadian interest rates continue to rise, and thus mortgage payments rise, more equity may not necessarily cover what you need it to.

    If you want to borrow money, borrowing while the market is high is your best bet. As mentioned, if the market cools significantly and that equity is no longer available, or the interest rate increases again, you may have fewer options to deal with the debt.

    A second mortgage is a great way to borrow against your assets without the penalties associated with breaking your first mortgage. If you’ve been considering a financial move to strike while the iron is still hot, don’t take too long to do so.

    At DebtCare, we can help you discover how to make your home work for you.

    Get in touch with us today by calling 1 (888) 890-0888.

    Source: CTV News, “Cooling measures already affecting hot Toronto housing market: survey,” http://www.ctvnews.ca/business/cooling-measures-already-affecting-hot-toronto-housing-market-survey-1.3473582.

     

  • What a 1% Increase in Interest Rates Would Mean to Canadians

    We’ve been hearing reports for months now that the Bank of Canada is likely to raise the Canadian interest rate in the coming months, and just a few weeks ago it finally happened. As it stands, Canada’s interest rate is sitting at 0.75%. The previously low rate made it possible for many Canadians to enter a turbulent housing market that continues to grow. However, amidst speculation that the rate could be set to rise again in the near future, many are questioning their ability to hold steady financially.

    What many Canadians don’t realize is that a 1% rate increase, for example, does not signify a 1% increase in payments. The reality is far more troublesome. In fact, a 1% rate hike could actually result in a 10%+ increase in mortgage payments. For instance, if you have a $200000 mortgage, at 3% interest, you’re paying $6000 in interest per year. However, if that rate increases to 4%, the interest grows to $8000 per year, which means you’re actually paying 33% more.

    A recent study done by Manulife Financial highlights how worrisome an increase to interest rates could be for a large portion of Canadian homeowners. According to the study, nearly 75% of Canadian homeowners interviewed said they would have difficulty making their mortgage payments if those payments were to increase by more than 10%.

    A further 38% said they could handle a mortgage payment increase of between 1 and 5% before they would have financial difficulty, while 20% said they could sustain an increase between 6 and 10%, and an additional 14% said that any hike would be a problem.

    As you can see, the study highlights just how unprepared many Canadians are if their debt repayment responsibilities were to increase.

    Furthermore, the Manulife survey found that millennial homeowners would be in the most trouble. This group would have the most difficulty, with 45% saying making their mortgage payment would become impossible within three months or less if the primary income-earner in the family were to suddenly become unemployed.

    If these numbers are cause for concern, perhaps you’re best served by examining the options to reduce or realign your current debt. For example, refinancing your mortgage to consolidate debt while interest rates are still low can significantly reduce your monthly payments and make even a 10% increase far more manageable. With housing prices high, this results in significant equity, meaning refinancing is usually far more feasible. If housing prices drop, this equity will also drop.

    With interest rates already going up, there’s no telling what’s to come. If you’re worried that a further rate increase could drastically impact your financial situation, don’t wait – get things sorted now while the market is still in your favour.

    At DebtCare, we can help you discover how to best situate yourself for financial stability.

    Call us today to discuss a solution: 1 (888) 890-0888.

     

    Source: The Huffington Post, “Canadian Homeowners Would Be Screwed By 1% Interest Rate Hike: Poll,” http://www.huffingtonpost.ca/2017/05/24/canadian-homeowners-rate-hike_n_16782802.html.

     

  • Tax Debt: Are You Self-Employed but Haven’t Filed Yet?

    Tax Debt: Are You Self-Employed but Haven’t Filed Yet?

    tax debtWe are well into July now and that means, if you are self-employed, your tax filing deadline has passed.

    If you filed on time, great, you’re set for another year. However, if you’ve yet to file, for whatever reason, you may be facing some serious penalties and a significant tax debt.

    Many people don’t file because they know they will end up owing and can’t pay or don’t have proof to support various write-offs.

    Often these individuals put off filing until the money to pay can be amassed (whether or not this is a realistic goal), while others choose to hold off in the hopes that the Canada Revenue Agency (CRA) will not be made aware of the transgression. Trust us, they will find out.

    The CRA is often the most aggressive when it comes to trust monies and tax debt. So, if you’ve collected HST all year, but didn’t file by the deadline, and thus have not declared or submitted these trust monies, the CRA is going to come in search of those funds.

    The CRA charges a late filing penalty of 5% of your balance owed plus an additional 1% for each month your return is late.

    As long as your return was filed by the June 15th deadline, you don’t have to worry about these penalties. However, you still have to worry about interest.

    Interest is charged on any unpaid balances at the established rates which are set by the CRA on a quarterly basis.

    Although your tax return is due on June 15th, interest will start to accrue the day after the personal tax filing deadline (April 30th). That means, whenever you do decide to file, if you owe, those penalties will be applied retroactively.

    Once the CRA is made aware of your debt, that’s when things can really start to get ugly. Although it is not illegal to owe a tax debt to the CRA, and thus prosecution is not a consequence, collection enforcement action is.

    Garnishments of your income, a frozen bank account, even a tax lien may be in your future.

    Our goal here is not to scare you.

    If this is the situation within which you currently find yourself, you’re probably already concerned and are looking for tax debt consolidation. Our goal is to impress upon you the importance of dealing with tax debt as soon as possible.

    Ignoring the problem will never make it disappear. It will actually just make things worse.

    If you’ve held off filing your taxes because you know you won’t be able to make the necessary payments, we can help with tax debt relief. At DebtCare, we have years of experience helping Canadian self-employed individuals and small business owners tackle troublesome tax debts.

    Get in touch with us today by calling 1 (888) 890-0888.

     

  • Don’t Help the Canada Revenue Agency Take Collection Action

    If you owe money to the Canada Revenue Agency (CRA), you can be sure that the next few months will find you dealing with various attempts to collect. The CRA is quite aggressive when it comes to collecting a tax debt, and waiting for you to pay up just isn’t the name of their game. Don’t make it any easier for them to begin collection action.

    If you receive a legitimate communication from the CRA asking for financial information, you may think that providing such would be harmless or may prove favourable when attempting to negotiate a payment plan. For example, if an agent calls and asks where you bank, or who your clients are (if you’re self-employed), you may feel like this is a reasonable request and provide the information.

    The same goes for forms they may ask you to fill out. While you might think that completing these forms will result in a fair payment arrangement – they may even allude to such – it typically won’t.

    Think those questions are risk-free or safe? Beware. This information will be used for collection action.

    What questions lead to enforcement action?

    • Where do you bank = frozen bank account
    • What is your address = property lien
    • Where do your work = wage garnishment
    • Who are your clients = garnishment to clients, up to 100%

    Aren’t these things the CRA already knows, or can find out on their own? Sometimes yes, sometimes no, but even in the case of things they can find out, why do the legwork for them, thereby making it easier for them to hurt you?

    When you can’t pay, but you’ve answered the questions and filled out the forms, the CRA now has all of the information they need to come after you. The CRA isn’t interested in long-term payment plans and they won’t reduce the amount that you owe! Any arrangement will disallow payments to other creditors (loans and credit cards), thereby decimating your credit, as well as other expenses. If money is owed, the CRA wants it, right now.

    If the CRA is asking questions and you know that you owe but can’t pay in full, it is time to get professional representation. We strongly recommend that you DO NOT complete these forms or answer any financial/personal questions without first speaking with a financial professional.

    At DebtCare, we can help you navigate the dangerous CRA waters.

    Get in touch today by calling 1 (888) 890-0888.