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Category: Blog

  • Restaurant Industry Hit Hard By COVID-19 – Financing Options for Restaurant Owners

    COVID-19 has severely impacted the hospitality and restaurant industries – with smaller, more entrepreneurial ventures being hit the hardest.

    A report released by Dalhousie University shares that tnhe Canadian hospitality industry could lose up to $20 billion in revenue next year.

    This is because, in addition to a global pandemic, people’s habits have changed too. Many Canadians are working from home and making food at home – this has reduced restaurant visits and deliveries.

    As a restaurant owner, you’re probably relying heavily on deliveries and online ordering at this point. Even though most Canadian provinces are now in later stages of reopening, if your restaurant is open, you might still not be operating at maximum capacity to meet the physical distancing guidelines.

    Winter also adds another layer of complexity to your operations.

    When it comes to financing for your restaurant, you may have managed to keep things going through savings or additional loans. For instance, many small businesses have received the $40,000 interest-free small business loan from the government which has to be repaid on or before December 31, 2022.

    If you’re still struggling to stay in business, trying to think of what you can do to survive, or are worried about restaurant equipment financing – financial restructuring may be the answer.

    Decreasing debt payments and reducing the overall debt and interest are some things you can take into consideration to find relief. As creditors are a lot more flexible, when it comes to negotiations, then they were Pre-COVID-19, this is a good time to consider debt management options.

    Though, if the situation is difficult at the moment or you don’t see the demand for your food business recovering, you might be thinking of closing down your business.

    If that’s the case, financial restructuring is an even bigger consideration because you will need to find ways to protect your assets, gauge which debts in the business carry personal liability, and create a plan to deal with the debts of today and tomorrow.

    Should you just opt for bankruptcy?

    Bankruptcy may not be a very easy way out. It can be expensive and can have personal implications if the debt carries director’s liability – such as unpaid source deductions and GST/HST liabilities.

    Another issue with bankruptcies is that the trustee involved does not represent you. They are impartial court appointed officers, who have to look out for both your and your creditors’ interests. While you can call them for help, they do not actually represent you.

    This is where debt consultants, like DebtCare, come in.

    We represent you. We look at your business’s financial information and come up with scenarios to help you assess the impact of different forms of financial restructuring on your business.

    While working with a debt consultant, you are free to ask questions and these won’t impact your case – unlike with a trustee who will add your answers to the record. Once information is shared, you can’t retract it.

    There are options other than insolvency and there is support for you.

    If you are stressed about the financing for your restaurant, you can reach out to us for a free consultation and guidance. Call us on 1-888-890-0888 or visit www.debtcare.ca.

  • Should I Refinance My Mortgage in Response to the Low Interest Rates?

    You may be thinking of refinancing your mortgage given that the interest rates are unprecedentedly low.

    Refinancing your mortgage can help you preserve your credit score by using the equity in your home to consolidate high interest debt.

    This is often a great option because not only can you reduce interest, you can also reduce your overall monthly payments.

    Here’s a list of pros and cons that will help determine if mortgage refinancing is the right option for you!

    Should I refinance my mortgage? How exactly should I go about refinancing? Would the changes in mortgage regulations impact me?

    These are questions that a lot of people, who are considering refinancing, are wondering about. The answer is actually not that complicated – it simply means that you have to reach outside of the CMHC lender pool.

    Recently, CMHC changed its underwriting policies for new applications for insured mortgages.

    Though, the rules haven’t changed for refinancing, reaching outside the CMHC lender pool can provide you better refinancing options.

    Basically, CMHC is a high ratio insurance that banks are required to have on high ratio mortgages. High ratio mortgages are those where mortgage financing above 75% of the value of your property is required.

    The good news is that there are many lenders who extend mortgage financing to you and don’t require CMHC insurance. In fact, they can extend the financing for 80% of your home’s value (or even higher if you have good credit).

    There are quite a few trust companies, mortgage investment companies, credit unions, finance companies, private lenders, and even insurance companies that offer mortgage refinancing options.

    The prevalence of these lenders may not be that obvious to you because many don’t deal directly with the public and exclusively lend through brokers.

    Each broker has a market of consumers that they cater to and lenders who they work with to provide specialized financial products. For example, if the goal is to purchase a home, a broker who specializes in purchase mortgages is advantageous. Similarly, a broker who specializes in debt consolidation and restructuring is the right choice for someone who wants to consolidate debt.

    The trick is choosing the right broker to help you manage your financial restructuring.

    You’d be surprised to see how many different types of mortgages and refinancing options are available on the market (for people with all types of credit and income) – many of which don’t require CMHC.

    At DebtCare, we specialize in helping people with financial problems. We have an extensive network of higher risk lenders, who can help you save your home, when banks may not be able to.

    In addition to mortgage refinancing, we can help present you all other options you have to ensure that you can effectively manage your debt. If you’re looking into refinancing options or want to speak to a debt consultant, contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca

  • Debt Management Plan – Restructure Finances as You Prepare to Change Careers

    If you’re thinking of switching careers … you’re not alone.

    A survey commissioned by Amazon, and published on the CNN website, shares that 61% of job seekers surveyed are looking for a job in a new industry because of the pandemic.

    COVID-19 has given us an introspection opportunity. It has given us time to review our career choices and examine if there is something better out there.

    While some people are questioning if they were even on the right career path, to begin with, others are looking into continuing their education.

    What has changed?

    The way we work has changed too. For instance, work from home policies were previously being implemented by only a handful of companies. Now, companies are beginning to see that work from home can indeed be implemented even in a Post-COVID-19 world.

    HR professionals are championing it because it has improved work-life balance, many employees are happy that they don’t have to commute long distances, and companies are realizing that they may not need huge office spaces after all!

    Similarly, when it comes to industries, some are doing better than others. For instance, healthcare, essential retail, and information technology firms continue to hire despite a global pandemic.

    Though, many jobs in retail, hospitality, travel, manufacturing, and tourism have disappeared.

    Why is it important to restructure your finances?

    If you’re considering a career transition or perhaps even going back to school, it is important to have a financial plan in place.

    Following your dreams and taking a leap of faith can be difficult if you have debt and financial concerns bothering you.

    This is particularly true if you’ve lost your job and already have debt to pay off. If your bills keep accumulating and you’re not able to pay them off, this can impact your credit score.

    So, when opting to start a new career, reviewing and restructuring your finances and debt can help you gain peace of mind. Your debt management plan should include:

    • A detailed budget.
    • A plan to avoid taking on more unnecessary debt, such as charging expenses to your credit card.
    • Consolidating debt payments and paying off high-interest debt.

    You can also use our online debt repayment calculator, to easily calculate how you can be out of debt within five years!

    How can we help?

    Getting your finances in order can be challenging particularly when you have to focus on a career transition.

    This is where credit advice from a financial consultant can help.

    Working with a financial consultant, like DebtCare, can help you come up with a plan to reduce debt; enabling you to have a fresh financial start to match your new career trajectory.

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

  • Now is the Time to File a Consumer Proposal – How Our Client Reduced $100,000+ Debt to $12,000

    In today’s uncertain environment, creditors are more flexible than ever.

    If you’re facing financial distress, now is the time to consider filing a consumer proposal and making an offer to your creditors to settle your debts for less than what you owe.

    In most cases, you can even keep your home and ensure that your assets remain untouched!

    Client Success Story – Reducing $100,000+ Debt to $12,000

    If you’re wondering if this works, we are sharing a client success story to show you what is possible.

    One of our clients, from Vancouver, is a self-employed professional who owed money to CRA after being reassessed.

    His total debt was over $100,000. After an evaluation, it was ascertained that he owed $65,000 to the CRA in personal income tax and GST and had credit card debt exceeding $44,000.

    With COVID-19 disrupting his earnings, he was relying on the CERB payments being made to him.

    As there was no home equity to pay off debts, he was wondering if he should just opt for a $1,800 bankruptcy to start over.

    We worked with him to help him evaluate all his options and developed a proposal.

    Taking advantage of the current climate, we helped him reduce his debt to $12,000. He is now able to pay this debt back within 5 years at 0% interest!

    Will a Consumer Proposal Pay Off Debt?

    So yes, a consumer proposal can help you pay off your debt. It can also stop any collection action and protect your assets.

    Though it does impact your credit rating temporarily, two years after your proposal is paid in full, your credit score can bounce back if you’re taking steps to ensure that you’re making timely payments.

    It is important to note that a consumer proposal is only available for unsecured, non-mortgage debts between $8,000 to $250,000. If you are carrying more debt than that, you may have to consider another type of proposal or file for bankruptcy. You can learn more about the differences between consumer proposals and bankruptcies here.

    Deciding what works for you, depends on your circumstances. The answer is based on some of these questions:

    • How much total debt do you have?
    • How much unsecured debt are you carrying?
    • What’s the worth of your assets?
    • Are you able to repay a portion of your debt?

    At DebtCare, we will help you answer these questions and help you develop an action plan to reduce and ultimately eliminate your debt.

    Contact us today for a free consultation and an independent review of your financial situation. Call us on 1-888-890-0888 or visit www.debtcare.ca.

  • Canadian Tax Consultants: Do You Have a Debt Relief Partner to Support Your Tax Clients Who are in Trouble?

    It is not uncommon to find out that your client is facing financial troubles – particularly during the time of a global pandemic.

    In fact, many independent professionals and tax specialists including personal tax accountants, tax preparers, bookkeepers, financial advisors, lawyers, and estate planners are amongst the first to learn that their client is facing financial turmoil.

    It can be a challenging situation when you are preparing a client’s books and your client reveals that they have a huge debt and no means to pay it off.

    Or, when your client is being audited and you know that the outcome will not be favourable.

    Where the CRA collections team is involved, the situation can get trickier. The CRA is relentless and when your client tries to manage their problem on their own – it can make matters worse.

    For instance, the CRA will look for financial disclosure that may lead your client to disclose where they work as well as their bank and asset details. Perhaps the CRA accepts a temporary arrangement – but the moment it is up, they can move forward with wage garnishments, freezing of bank accounts, and liens on the property.

    Today, an average Canadian owes $1.58 per dollar of disposable income.

    This debt is likely to increase when mortgage deferrals end, the government’s relief measures are withdrawn, and the CRA’s collection action resumes.

    This is the calm before a massive storm – would you agree?

    This is why it is great to have a partner in your corner who can independently represent your client and work with them to resolve their financial challenges.

    By providing your clients access to debt consolidation programs and opportunities for debt reduction, you are not only helping them navigate their financial challenges but are also strengthening your long-term relationships.

    This same level of service may not be received if you send your client to a trustee, this is because they offer insolvency as their service and your client will be counselled on that basis.

    Similarly, if you send your client to a bad credit lender who only offers high-interest products or a mortgage broker who only arranges mortgages, your client will only receive advice in those specific areas.

    At DebtCare, we provide access to many financial options and debt consolidation programs. We take on a consultatory role where the client pays for our consultation and after working with their financial profile, we guide them down the best path.

    This includes aligning all professionals that will be needed. Whether it is securing financing from a lender or working with a trustee to facilitate a consumer proposal, we can help.

    To learn more about our services for Canadian tax consultants, call or text us on 1-888-890-0888 or visit www.debtcare.ca.

     

  • Canada Emergency Response Benefit (CERB) and the CRA Tax Implications – Here’s What You Need to Know

    There is no denying that the Canada Emergency Response Benefit (CERB) helped many Canadians – over 8.5 million individuals to be specific.

    To get the money into the hands of the Canadians who needed it, the government processed applications as swiftly as possible. To do this in record time, the government relied very heavily on an honour system.

    This is why the benefit was handed out without further verifications at that time.

    CERB ends – what next?

    As of last week, CERB has officially ended. Though, individuals can still retroactively apply for CERB payments for any period before October 3 by December 3.

    As the CERB recipients are now being transferred to an updated employment insurance (EI) system, we take a look at CERB and its associated CRA tax implications.

    You will have to pay taxes on CERB as it is considered as income for this year. Here are a few things that can help you be more prepared for the next tax season.

    Did you qualify for CERB?

    As CERB was so new, many people weren’t sure if they qualified.

    Some people even received it twice as they applied through both Service Canada and the CRA for the same eligibility period.

    Here’s the eligibility criteria to help you ascertain if you were eligible:

    • You did not leave your job voluntarily.
    • You are over 15 years of age.
    • You earned a minimum of $5,000 (before taxes) in the last 12 months or in 2019.
    • You stopped working due to COVID-19, your work hours were reduced because of COVID-19, or you were unable to work as you were taking care of someone.

    In addition to being able to meet the criteria shared above, you also need to ensure that you only received one payment per eligibility period.

    Will the CRA impose penalties?

    Many people applied for CERB because they were dealing with financial problems that made it hard to make ends meet. Some of these individuals may not have been eligible.

    If you feel that you were not eligible or your eligibility changed over the period, it is prudent to seek tax advice and have financial strategies in place to deal with any action from the CRA.

    As the benefit was distributed without prior checks, the CRA will assess cases when taxes are filed.

    This is because, as CBC highlights, even a fraud rate of 1% could cost the federal government billions of dollars.

    So, if you are reassessed you will not only have to pay back the money but also penalties and interest retroactively. If you already have accumulated debt, you may be looking at potential new debt in the coming tax season.

    Tax debt and CRA collections are areas where we can help!

    We offer a free consultation to explore what options are available to you.

    As a debt and tax consultant, we can also look at your situation and give you an idea of whether you qualified for CERB, what the potential tax amount could look like, and what you can do to prevent collection action.

    Contact us, for tax advice, by calling us on 1-888-890-0888 or visiting www.debtcare.ca.

  • FAQ: I want to refinance but COVID-19 has ruined my credit?

    With the pandemic causing business closures and layoffs across the country, many individuals feel that their credit score has taken a hit.

    Where to start?

    While the situation might seem gloomy at the moment, your credit may not be as bad you think it is. The first step towards creating a practical plan of action is getting an updated credit report through Equifax or TransUnion.

    If you have equity in your home, it is also recommended to do a quick analysis of your home’s current worth and how much you own in the mortgages.

    Where do you stand in terms of credit?

    When you have your credit report in your hand, you will see that every credit account, for an individual, is assigned a value between R1 to R9. R stands for revolving credit and the numbers 1-9 are account classifications, based on the notes provided by your creditors.

    If you are between R2-R5, your credit score can recover to an R1 position if you are able to make your payments. Though, if there have been habitual late payments or an R9 rating, your credit is damaged for the next 6 years.

    Where does home equity fit in?

    So, your home equity is the value of your home minus the total outstanding debt registered against the title of the property. Lenders use a calculation called Loan-to-Value ratio and lend on the basis of the equity available in your home.

    Hence, it’s really not about bad credit anymore. The value of your equity determines the options you have when it comes to creating a financial plan to repay your overall debt.

    Many banks and institutional lenders that lend to the public will want you to have decent credit and provable income. Decent credit means a 680+ beacon score. Some of these lenders may lend on slightly lesser scores if you have more equity. You can expect to receive a loan of up to 80% of the home value, less the mortgage balance.

    Trust companies, mortgage investment corporations, credit unions, and private lenders will often lend to people who have bad credit or have difficulty proving income because they mainly lend on the basis of equity. You can expect to receive a loan of up to 65%-75% of the home value, less the mortgage balance. Additionally, these lenders typically lend through mortgage brokers.

    What if I owe more?

    If you owe more than 80% of the value of your property (or close to it), refinancing your mortgage may not be an option for you – but that doesn’t mean its game over in terms of dealing with your debt!

    If you are in a financial crisis and you can’t see a path where a lender will loan you the money to pay off your debt – you can look at other options. There are many federally mandated solutions that protect people in debt and prevent creditors from taking action against them.

    A consumer proposal is an excellent example. In a consumer proposal, an arrangement is made with your creditors where they accept often much less than what you owe, over a period of 5 years. The proposal can help you keep your home, freeze the interest, cease collection action, and enable you to make a single monthly payment that you can live with.

    If you are a homeowner struggling with debt, the best thing that you can do is work with a professional who can assess all the options.

    This can’t happen at a bank or a similar financial institution because they strictly adhere to their predefined lending criteria. A debt consulting company, that also arranges financing, is the best way to go because they are able to present all of your options and help you choose the one that will help you deal with the present crisis while considering your future plans.

    At Debt Care, we work with all types of lenders who will lend under all types of circumstances.

    Contact us today for a free consultation on proposals, bankruptcies, and mortgage refinancing. Call 1-888-890-0888 or visit www.debtcare.ca

  • Does a Lower Interest Rate Really Mean That You Should Borrow More?

    As the economy is beginning to show signs of recovery and the physical distancing rules are being eased, various benefits and deferrals mandated by the government are also ending. With the buffer being removed, it is crucial for you to evaluate your financial position to ensure that you’re prepared to handle your debt payments.

    For instance, the Canada Revenue Agency’s tax filing deadline for 2019 individual income tax returns is now September 30. Individuals who are not able to make payments by this date will likely face late-filing penalties.

    Similarly, over 700,000 households who had been given the benefit of deferring mortgage payments, will soon have to resume these payments.

    Basically, all the payments that were temporarily deferred will be due at some point.

    Interest rate update

    Today, the Bank of Canada issued a press release announcing its decision to keep the interest rate at 0.25%. The interest rate is currently being kept on the lower side to enable individuals and businesses to have access to better credit deals during these unprecedented times.

    While it may seem enticing to explore borrowing options, given that the interest rate is low, you should proceed with caution.

    Even though the BOC interest rate is lower, it doesn’t mean that all lenders will offer a low rate, especially to those individuals who already have debt to pay off. Also, additional credit can help in the short-term, but it is not sustainable, and you will eventually need a plan to pay it off.

    Long term planning is the key to eliminating debt!

    What’s the recommended course of action?

    It is important to start getting your finances back on track. Some of the things you can do to keep your finances in check are:

    • Reviewing all your liabilities and paying off high-interest debt.
    • Creating a budget and tracking expenses.
    • Avoiding unnecessary debt such as credit card expenses, until absolutely necessary.

    Following these steps will help you anticipate and address any future issues such as a lien on your property. If you feel that you need additional support, reach out to credit counseling services to assist in consolidating debt payments or filing for insolvencies.

    What’s the right solution?

    There is no one size fits all approach. Especially during these times.

    The solution usually depends on the type of debt you are carrying. For instance, mortgage debt could be dealt with through a refinancing, if enough equity is available. Unsecured debts might be eligible for settlement, and outstanding utility bills could be handled through a debt consolidation loan.

    The key is to consult with a debt counsellor who can walk you through your options and make a plan that’s tailored according to your requirements.

    At DebtCare Canada, we have helped thousands of Canadians reduce and restructure their debt. If you’re struggling with mortgage, rent payments, or any other bills, please get in touch so we can help you find a way through.

    Contact us by calling or texting 1-888-890-0888 or visit www.debtcare.ca to learn more about our credit counselling services.

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

    The next BOC announcement is scheduled for October 28, 2020.

  • How to save your home through the COVID-19 crisis – deferrals are almost up!

    Over the past few months, due to the COVID-19 pandemic, financial institutions have provided mortgage deferment options to homeowners to ease the burden of debt. In fact, payments of more than $180 billion in mortgages and home equity lines of credit have been deferred by top Canadian banks.

    In addition to this, collections activities, by the Canadian Revenue Agency, on new debts have also been suspended until further notice to reduce the financial strain on Canadians.

    Deferrals may be up soon

    You have to keep into perspective that even though the CRA collections have been paused, they will resume soon and those who are still feeling the financial impacts of COVID-19 will need to have a plan.

    Similarly, the 700,000 households who have been given the benefit of deferring mortgage payments or provided flexible payment options for credit cards and lines of credit, for up to 6 months, will have to make payments when the deferral period ends.

    What should you do?

    What you definitely don’t want to do is wait. If you have sufficient equity in your home and a comparatively lesser overall debt, it would be easier to explore refinancing options. Refinancing your mortgage can save your credit score and help you take advantage of lower interest rates.

    However, it is a bit more complicated when there isn’t enough equity to refinance. In a situation like this, time is of the essence. To save your home during a financial crisis, it is recommended to take remedial actions immediately.

    Working with a good financial advisor is the first step. They will assess your entire financial profile and look at all the options available.

    Sometimes a consumer proposal makes more sense than refinancing – especially when the equity is limited

    What is a consumer proposal?

    It is a proposal made to your creditors, where your creditors agree to accept a single payment representing a percentage of your overall debt, that you repay monthly, normally over a term of 5 years.

    Consumer proposals are a viable option especially when you are facing collection action and want to protect your home.

    Through a proposal, you can consolidate your debt, have a single fixed monthly payment, and can keep your home. Your creditors will have to stop collection action, so if there is no lien on your home now, they can’t place one.

    If you have already started making late payments to credit, these late payments will report to the credit report for 6 years. However, a consumer proposal reports to your credit report for 3 years from when it is paid off in full. So, the good thing is, that if your financial situation improves you can pay the debt off sooner and clean up your credit history faster!

    Additionally, two years after your proposal is paid in full and your credit score bounces back, many mortgage lenders will agree to lend to you again.

    So, when considering filing for a consumer proposal, it is strongly recommended to consult a financial advisor who can look at the whole financial situation and help determine the best course of action for you.

    At DebtCare Canada, we help you weigh all the pros and cons and do everything we can to save your home.

    If you’re affected by the COVID-19 financial crisis, contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Homeowners: How to Cut $25,000 of Debt Down to a Minimum Payment of $320.00 Per Month?

    With the COVID-19 pandemic affecting the overall income of most households, it is wise to re-evaluate your financial plans to ensure that you’re able to pay your debt and retain your assets. This is particularly useful if you’re anticipating additional expenditure or a decline in your monthly income.

    If you are looking for ways to reduce your overall debt or restructure your monthly payments, you can look into a home equity loan.

    Obtaining a second mortgage, by leveraging your home equity, is a very practical solution that many homeowners in Canada opt for.

    What is a second mortgage?

    As the name suggests, a second mortgage is an additional loan taken on a property that is already mortgaged. It is secured on the basis of your home equity.

    • Second mortgage is behind your first mortgage, so if you like your first mortgage rate or are currently locked into the first mortgage – a second mortgage enables you to unlock equity without any disruption to your first mortgage.
    • A second mortgage opens you up to more lenders – because second mortgages are smaller, there are more lenders offering them including private lenders.
    • Second mortgage lenders often lend based on equity and not your credit and income. So, if your credit is bruised or you are self-employed, you can still get the help you need.

    How much equity is needed to get a second mortgage?

    Lenders use a calculation called Loan to Value (LTV) ratio when deciding how much of your equity they will loan you. Generally:

    • If you have a strong income and decent credit you can borrow up to 80% of your home equity.
    • If you have poor credit, limited time on the job, or income that can’t be proved – then you can borrow up to 65%-75% of your home equity.

    While banks offer second mortgages – it is always best to go through a mortgage broker for this type of financing. This is because many lenders who offer second mortgages don’t lend to the public directly and only work through brokers. Some of the advantages of working with a broker include:

    • A broker is able to look at your financial profile and know immediately which lenders will work with you. This makes the approval process faster.
    • A broker has an in-depth understanding of the mortgage closing process where secondary financing is concerned and will be able to expedite your closing more efficiently.
    • Brokers who offer finance and debt consulting will be able to offer other financial solutions if, for some reason, you can’t get the mortgage.

    So, is a second mortgage right for you?

    At DebtCare Canada, we can help you evaluate your options and explore a variety of different solutions. There are a number of ways to deal with debt and it is vital to create a well-thought-out plan to eliminate your debt for good.

    Special situations, like the current pandemic, call for special resources. We have access to private mortgage lenders that don’t lend directly to the public and only work through brokers. Contact us today to discuss your options – including second mortgages, home equity loans, HELOCs, and more.

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