debtcare.ca

Category: Blog

  • The Last Loan

    the last loanWe wanted to write this blog because we often see patterns regarding triggers for serious financial problems and clear points in time where different choices could have changed the course of the problem. Sure, there are instances where a sudden occurrence, such as a job loss or divorce, can cause abrupt and unexpected financial turmoil, but more often than not people build their financial problem over time.

    This is evidenced by just about every news publication reporting that Canadians are carrying a dangerously high level of personal debt. Over time debt accumulates like a snowball.

    Example scenario:

    • It only takes using those credit cards too much one month to push you into a situation where you can’t pay in full and so you make a smaller payment.
    • Eventually you have a few cards with small balances so you decide to get a line of credit to consolidate them – only you keep using the cards once you’ve paid them off.
    • Finally you decide that enough is enough – you get a consolidation loan at the bank to pay the line of credit and the credit cards.
    • You go a couple of months without using the cards but then your transmission goes. You think, well, you will only use the card once, but this means the cycle starts again…
    • A year later, you have the consolidation loan and a balance on the line of credit and a couple of credit cards.
    • You have accumulated some equity in your property, so you decide to get a second mortgage to pay off all the debt one final time. You are successful in doing so.
    • However, in the end, just like with the last consolidation loan, a few months later you begin using your cards again and a year later you find yourself making a slew of minimum payments on your credit cards.

    Now you reach a pivotal point – another loan? We say no! Let your last loan be the last loan.

    Just as Einstein said, the definition of insanity is doing the same thing over and over again and expecting different results. If you continue to refinance and restructure your debt year over year, each year owing more, you will be caught in a cycle that is not going to break unless you win the lottery or get a major raise at work (and how likely is either one of these?).

    There comes a time when one must say “self, I need to get some professional help”. Just like you may go to a therapist for a personal problem or a lawyer for a legal problem, one who continues to struggle with accumulated debt also benefits from professional guidance.

    Stop the insanity! Maybe there is a quick fix and some help with budgeting is the answer, or perhaps you have really dug yourself into a hole and need some major intervention. Either way, you are going to need to do something very different to break the financial cycle you are in.

    If you would like to make your last loan your last loan and need financial guidance DebtCare Canada can help. Call us today 1-888-890-0888.

  • Myth vs Fact: Consumer Proposal vs Bankruptcy

    consumer proposal, consumer proposal vs bankruptcyConsumer proposals and bankruptcy are often confused with one another because they both involve a Trustee in Bankruptcy. In Canada, the government introduced legislation to protect people who have reached a breaking point with their debt. Over time that legislation has been amended and re-worked to simplify processes and to make the process fair for both creditors and those who owe money.

    The Superintendent of Bankruptcy is an entity of Industry Canada, and is the individual who administers the Bankruptcy and Insolvency Act through appointed officers. These officers are Trustees in Bankruptcy. The Trustee in Bankruptcy’s role is to administer a consumer proposal or bankruptcy on behalf of the creditors and the people who owe money.

    A bankruptcy and a consumer proposal are both powerful in that, once filed, all collection and enforcement action being made by unsecured creditors stops, interest stops, and in many cases the overall amount of debt is reduced.

    That being said, a consumer proposal bears less strings than bankruptcy and should always be considered as option number 1 – bankruptcy is generally a last resort measure.

    In a consumer proposal, a proposal is made to your creditors – basically you are offering them a sum of money to be repaid through the Trustee over a term of, typically, 5 years.

    • Your creditors have a specified amount of time to accept or reject the proposal.
    • If no one responds, the proposal is accepted.
    • If the majority creditor(s) accepts, the proposal is accepted.
    • If a proposal is accepted you make a single monthly payment to the Trustee for the term proposed. You can pay off the proposal at any time. You have no ongoing income reporting requirements to your Trustee.

    In a bankruptcy your creditors don’t get a choice to accept or reject.

    • You make a monthly payment to the Trustee in Bankruptcy over 9 or 21 months in a first time bankruptcy, depending on your income. There are maximum income thresholds set out and if your income exceeds those thresholds the term of your bankruptcy payment extends from 9 to 21 months.
    • During your bankruptcy you have to report your income and any changes to your financial circumstances to the Trustee.
    • If you come into any significant sums of money you may have to pay surplus income to the Trustee.

    A consumer proposal is removed from your credit report 3 years from the date it is paid in full. A bankruptcy remains for 6 years from the date of discharge.

    Since the Trustee doesn’t represent you, going to one directly is never recommended. Any financial information you divulge can’t be taken back. Prior to meeting a Trustee you are best served to work with a financial representative who specializes in bankruptcy and consumer proposals – one who will represent you – to review and help you structure your financial information to be presented to a Trustee. Some may even help you negotiate the terms of your proposal or bankruptcy with the Trustee.

    Both of these options are viable when it comes to debt relief – just make sure that you are not putting your financial affairs at risk by attending a Trustee before seeking real help.

    For more information or to protect yourself before going to a Trustee, please call DebtCare Canada today at 1-888-890-0888.

  • Income Tax Time is Here – Preparing for the 2015 Tax Deadline

    2015 tax deadlineCanada’s income tax deadline for the 2014 tax year is right around the corner! While some anticipate refunds and are off to file with bells on, others are dreading this date and even considering not filing because of a tax debt that will follow.

    First of all, if you think you will owe, not filing is not the answer. You may think it will buy you time, but really all it will buy is penalties, interest and a bad history with CRA. If you think you will owe, be realistic about what you will owe and your ability to repay.

    Now, it is true that once you file CRA will ask you to pay the debt in full. With that said, CRA has been known to accept payment plans of up to 24 months on a tax debt. While there is no guarantee that this will happen for you, it has happened for others.

    If you took the amount of your tax debt and divided it by 24 months, would you be able to afford to repay the debt?

    If the answer is yes, the next steps you take are crucial.

    Negotiating directly with CRA can be dangerous. Before agreeing to any monthly payment arrangement they will ask for full disclosure of your assets, income, income sources, debt and more…

    The challenge here is that they may agree to payments over a 6 month period, based on a 24 month repayment, and then at the end of 6 months take the option to re-review your financial information. At this point they can reject renegotiating the monthly payments, demand payment in full and then use the information in your financial disclosure to take collection action against you.

    Another common occurrence is that when you submit an honest budget which includes your minimum obligations to other creditors, the CRA may then reject those payments and say that any surplus funds which could be directed to other creditors need to be directed to CRA. Even with all of this said, you absolutely do need to do something.

    If the answer was no…

    If you know that repaying the debt monthly, even over 24 months, is highly unlikely, you need to get some financial assistance immediately. A professional experienced with financial restructuring may be able to come up with a solution where you can repay the debt over a longer term, say 5 years.

    In either scenario…

    In either case, professional help is a necessity. Negotiating with CRA is, to be frank, too dangerous financially. Financial professionals with knowledge regarding dealing with CRA know how to navigate the bureaucracy and protect your information.

    Don’t ignore a tax debt in the hopes that it will magically disappear – it won’t. Call DebtCare Canada today: 1-888-890-0888.

  • Ahead of the Game: Tax Debt Relief Before the Tax Deadline

    Tax Debt ReliefThe deadline for filing your 2014 tax return is fast approaching, and that means getting all of your ducks in a row to be able to meet those tax obligations that often arise once your assessment is returned to you. For those who know they won’t owe, this time of year represents just an added bit of necessary hassle – but for those individuals who either already owe a tax debt, or know that one is looming, this time represents significantly more stress.

    If you are in the latter group, avoiding the issue is never a good idea. If you owe the CRA money, they will try their very best to get it – as soon as possible. This might mean leveraging various enforcement actions against you, including wage garnishments, frozen bank accounts or even property liens. Pretending the problem doesn’t exist isn’t going to make it go away.

    Here are some options to consider for tax debt relief that may be beneficial:

    Negotiate with CRA

    • As mentioned, when the CRA is owed money, they will try their best to get it. Calling to negotiate with an agent might work as far as getting a payment plan in place – but there are number of things to be careful with when it comes to this option.
      • The CRA isn’t interested in your financial situation, and if you don’t have the extra income to pay the debt they are still going to attempt to get the maximum amount possible.
      • Miss one payment and they will leverage those above mentioned enforcement actions almost immediately.
      • Once you’ve called the CRA and tried to negotiate a payment plan, the CRA will be aware of all of your personal information – including your banking information – making self-protection almost impossible.
    • This option is usually one that is best accomplished by having an expert act on your behalf and not by acting on your own.

    Consumer Proposal or Bankruptcy

    • If your tax debt is substantial, both of these options can offer a significant amount of tax debt relief. Either one might offer the benefit of a reduced debt and/or interest, and can ensure that your monthly payments are set at an amount that you can handle.
    • Neither of these options can be achieved on your own – as legal processes, both need to be conducted by a trustee in bankruptcy, someone with the knowledge and experience conducting these forms of debt relief. Just make sure to get the advice or assistance of a debt consultant first to represent you through the entire process.

    Debt Consolidation

    • Need to free up some money to be able to meet those tax debts head on? A debt consolidation may be the answer. This is also something to be considered when consulting a debt specialist.

    For many Canadians, this time of year is one that leads many to think about tax debt relief and how to obtain it. DebtCare Canada can help. Call us today at 1-888-890-0888.

  • Canadian Household Debt – How Do You Stack Up?

    Canadian Household DebtEarlier in February, the McKinsey Global Institute released a report regarding debt and global economies, and after surveying 47 countries, listed seven with ‘potential vulnerabilities’ when it comes to household debt. Among these seven is Canada, and the report argues that this Canadian household debt could prove disastrous, leading to further financial instability and a consumer spending slowdown.

    A recent Globe and Mail article touched on this report, stating that “As Canada’s economy begins to slow, the country’s growing household debt burden is raising new concerns as it outpaces that of most developed countries. In fact, Canada had the second-biggest jump in household debt-to-income ratios of any country other than Greece between 2007 and the second quarter of 2014.”

    You can view the entire report here.

    For many Canadians, this report likely does not come as a shock – a vast majority carry consumer debt loads that are significant. Canadian household debt has become a major source of stress for many individuals and families alike, leading either to a cut in consumer spending (which the report suggested as a potential outcome), placing some financial responsibilities before others, or both.

    If you find yourself in the Canadian household debt camp that is not so much swimming as treading water, it might be time to consider some alternatives. A debt consolidation, consumer proposal or bankruptcy can be a lifesaver when it comes to getting your finances back on track and eliminating financial stress from your life.

    Tired of being part of these startling statistics? DebtCare can help. Call us today to find out about the options available to help lower your consumer and household debt: 1-888-890-0888.

  • Tax Time is Upon Us: Are You Afraid You’ll End Up Owing Money to CRA?

    Owing Money to CRAIt is that time of year again; soon the tax man will be knocking at the door asking for your 2014 assessment. If you know that your taxes are all in order and are expecting a refund, that is great! However, if you are in the opposite camp, and are afraid that once those taxes are filed you are going to end up owing money to CRA, you might be a bit worried.

    Tax debt is really scary, and for good reason. Unlike other creditors, CRA does not need a court order to freeze your bank account or send a wage garnishment letter to your employer. Not only do these things impact your personal life, they can also begin to impact your professional life. This is not a good situation to be in!

    So, what can you do when you know that, upon receiving your assessment, there will be a balance owing at the bottom of the document?

    1. Think filing late in order to give yourself time to get your finances in order will do the trick? Think again. CRA applies a late filing penalty to every month you miss (5% of your 2014 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months). This doubles if you also filed late last year or in one of the preceding years.
    2. If you have the means to pay off the debt in its entirety, do so as soon as possible. This might mean using some available credit or dipping into your savings, but since the debt is not interest free and CRA is unforgiving when payments are missed, this is by far your best option.
    3. If you don’t have the ability to pay off the debt, consider a consumer proposal. Filed by a registered trustee in bankruptcy, a consumer proposal, once accepted, can stop interest, consolidate all debts (not just the tax debt) into one monthly payment, and in some cases can even bring your total debt down. But there are pitfalls, and to avoid them this should not be entered into without meeting with a debt consultant to give you independent advice prior to filing your proposal.

    Ignoring a tax debt in the hopes that it will go away is not a good idea. All this approach will garner is a higher amount owing once penalties and interest have been added. Don’t ignore the debt – deal with it.

    For more about what to do when you end up owing money to CRA, or any other debts, please contact DebtCare Canada today by calling 1-888-890-0888.

  • Step into Spring with a Smile: Realistic Ways to Get Rid of Credit Card Debt

    credit card debtIs your credit card debt making it hard to get to sleep at night? Are you finding it hard to focus on daily tasks because of the stress? Are collection agencies calling you or your family members in an attempt to obtain what you owe? Are you avoiding opening bills that you know you can’t pay?

    If you answered yes to any of these questions, don’t worry, you are not alone. Thousands of Canadians struggle with this financial problem on a regular basis. The ease with which credit companies extend credit and the high interest rates have made credit card debt a national problem, one that continues to plague the average Canadian no matter their income or financial status.

    Does this mean that you have to continue to struggle to make those monthly payments or combat the stress? No – there are ways to get rid of credit card debt and stop the calls and finally get a good night’s sleep.

    • Firstly, stop using those cards. Right now! Remove the cards from your wallet to help resist the temptation.
    • Secondly, assess your debt. Make a list of the credit cards, the amounts you owe, and the monthly payments. Follow this up with a monthly budget, including everything you spend money on and all income. Once you’ve done this, establish what expenditures can be cut – and cut them.
    • Attack your debt. Once you’ve cut your spending, start applying that extra income to your current debt load. Make sure that you are making at least the monthly minimum payment on each card, and apply any additional savings to the balances owed.

    If this doesn’t seem like a realistic approach for the amount of debt you are currently carrying, or if making minimum payments has become almost impossible, some more serious methods may need to be considered. If this is your current situation, our best advice is to speak with an experienced debt specialist right away. Getting rid of your credit card debt might mean a debt consolidation, consumer proposal or bankruptcy – all of which are complex and come with a number of great benefits.

    Stop ignoring those phone calls and throwing away those bills. Deal with your credit card debt and eliminate that stress.

    For more about getting rid of credit card debt that seems to be holding you back please call DebtCare Canada today at 1-888-890-0888.

  • DebtCare’s CEO Michael Goldenberg Talks Debt Management Assistance

    MikeDebt continues to be something that many Canadian families struggle with. Check out this interview where Mint Intuit sat down with DebtCare CEO Michael Goldenberg to discuss what you should look for when seeking assistance from a debt management company.

    Check out the full interview here: https://www.mint.com/expert-interview-michael-goldenberg-debt-management-assistance.

    DebtCare has the experience and knowledge that can help you achieve financial freedom. Call us today at 1-888-890-0888.

  • Debt Consolidations – The Dos and Don’ts

    Debt ConsolidationsOver the last few years, debt consolidations have become a very popular form of debt relief. For various reasons, not least of which are the single monthly payments and the significantly reduced interest, debt consolidations make it easy for those struggling to maintain a hold on their finances to regain a measure of control.

    That being said, there are some definite dos and don’ts when it comes to debt consolidations. If you are considering this method as a means to fix your financial situation, here are some important things to think about before going full-steam ahead.

    Do: Talk to a professional debt consultant. For some, debt consolidation is the best option – but this will depend on a number of different factors, including the amount of debt, type of debts, and your current credit status. For example, if your credit is less than stellar, you may not be able to obtain approval for a debt consolidation loan.

    Don’t: Going with the first company you find is never a good idea. Do your research. There are a great many companies that claim to offer debt consolidations – but some are more reputable than others. Beware of those companies that require you to pay upfront and amass a small sum before any money goes to creditors. Also be wary of those with a less than stable history: if the company has only been in business for a year, it might be better to stay away. Read up on those companies you are considering. Make sure that they have a well-established, respected reputation, and the experience that means they can actually help relieve your debt worries.

    Do: Once you have decided that a debt consolidation is the right choice for your financial situation, think carefully about repayment terms. A longer term may be attractive because it offers lower monthly payments, but just remember that you will end up paying more in interest vs. a shorter term with higher monthly payments.

    Don’t: Using those cards that you have cleared with a debt consolidation is a very bad idea. For example, if you completely clear a credit card with a limit of $10,000, that doesn’t mean that you have $10,000 to spend!! Consider reducing the limits on cards you’ve cleared, and stop using these unless you absolutely have the money to pay them off as soon as you get the bill. This is a very dangerous temptation for many – so try and remove the temptation as much as possible.

    A debt consolidation can be incredibly beneficial – you just need to be careful before enlisting the services of a company that offers this service.

    DebtCare Canada has the knowledge and experience – and the reputation! We know how to help you get rid of those debts and get back on track financially. Call us today for a free consultation: 1-888-890-0888.

  • More Money, More Problems? The Danger with Payday Loans

    payday loansIt is becoming far more common these days to hear advertisements on the radio, or see gigantic signs when driving down the street, for relief from financial woes in the form of payday loans. These “convenient”, and we use that term very loosely, almost immediate loans claim to offer that extra money to get you through until the next payday – some even use the excuse to treat yourself as a reason to obtain one. So, does more money really equal more problems?

    Are you thinking of getting a payday loan to tide you over for a bit – or even to treat yourself? Wait – these seemingly innocent fast-cash solutions come with their own host of problems, and if you are not aware of the risk you can easily get in over your head – and rather quickly!

    First, payday loans are not free – obviously. When a company offers you fast cash, $100 for $20 for example, you might think that this $20 is worth the extra cash in hand at this moment. So you head into the business, provide your paystub and walk out with your loan. The fact that no credit report is required should be a major red flag!! This is definitely one of those times when “sounds too good to be true” really does ring true.

    What if that $100 though just doesn’t seem to cut it and instead you are thinking $1000 would be that much better? Now you are talking about a $200 cost – that is a 20% fee to borrow money for sometimes as short a period as two weeks. And borrower beware – 20% here is just an example, as some places will charge far more!

    Worse than the fees is the jam you find yourself in when, at the end of the month, you are yet again strapped for cash and can’t pay that payday loan in full. Think about it; if you didn’t have the cash at the beginning of the month, what makes you think you’ll have it at the end? Can’t pay it back in full? Now you are looking at another $200 in interest plus a fee for the extension.

    When broken down, it is clear that payday loans are a prime example of fool’s gold – money that never actually belongs to you and just ends up costing you dearly in the end. Know the dangers before you head into that establishment and perhaps consider some other avenue.

    For more about the dangers of payday loans, or for help dealing with a revolving payday loan you can’t seem to shake, please call DebtCare Canada today at 1-888-890-0888.