debtcare.ca

Category: Blog

  • Wallet-Friendly Summer Fun Ideas – Don’t Get Caught Drowning in Debt

    drowning in debtAny parent knows that once school is out, the kids are itching for some fun outside of the classroom. For many, this means summer camps or family vacations, but if you are drowning in debt, the thought of shelling out all that extra dough just to keep the kids entertained may be a bit more daunting than you’d like. With that in mind, check out this list of wallet-friendly summer fun ideas to keep your little ones out of your hair and out of your wallet.

    1. Go to the beach – pack a picnic lunch, grab some towels and some water toys and head out for a day in the sun. Just don’t forget the sunscreen.
    2. Spend a day at the library – just because the kids are out of the classroom doesn’t mean they can’t read for pleasure. Head to the local library and get the kids signed up for a library card. Let them pick out their own book or spend some time on the computer.
    3. Craft day – tie-dyed t-shirts, homemade play-dough, a kite they can fly in the backyard. Check out Pinterest for some great ideas that don’t require a lot of payout.
    4. Berry picking and jam making – not only can you get them out of the house and out of doors, this can be a great way to get some preserving done for the coming months.
    5. Gardening – head to the garden centre and let the kids pick out a plant or two, then head back home and set out a separate space in the garden that they can design all on their own.
    6. Drive-in movies – check out the local drive-in theatre and get great bang for your buck. Take advantage of the outing and bring dinner and snacks with you to save on treats. Go for a walk around or spend some time at the park. And once they are tired out, take advantage of the peace and quiet and sit back and relax and enjoy the movie.
    7. Camp out – set up a tent in the backyard, light a bonfire, and get the ghost stories ready. The close proximity to a private bathroom is just an added bonus!
    8. Take a hike – fill your backpack with bug spray, a few bottles of water and some trail-mix and head to the local nature area. Keep kids’ minds going by creating a scavenger hunt so they can play along the way.
    9. Set up a lemonade stand – not only will this motivate the kids to get out there, letting them make some money, but it teaches them about working and can help you teach them about finances.
    10. Help out – contact local charities in your area and find out if you can help out. Spending the day at an animal shelter or at the community garden is a great way to teach kids about giving back and it doesn’t cost you anything more than your time.

    Summer spending doesn’t have to cost an arm and a leg. Get creative, and keep that money in your wallet!

    If you feel like you are already drowning in debt, use these tips to keep the spending to a minimum. And if you feel like you need some help getting those debts under control, contact DebtCare today by calling 1-888-890-0888.

  • DebtCare’s Financial and Debt Expert Sara Mitchell Interviewed on CFRB 1010 by Tim Hudak

    Sara Mitchell, financial and debt expert at DebtCare Canada, was interviewed on CFRB 1010 by Ontario’s PC leader Tim Hudak about the implication of debt on Canadian families and solutions for overcoming it. If you are in a financial crisis, feel free to reach out to Sara or the DebtCare team at www.debtcare.ca or by calling 888-868-1400.

  • Not So Happy Canada Day When it Comes to Canadian Consumer Debt According to Yahoo Finance

    Canadian Consumer DebtLast week we celebrated Canada Day and that means that half of 2014 is officially over. Just like New Year’s Day, this holiday often leads people to think back on the past 6 months – have you evaluated your current debt load? Well, if you haven’t, Yahoo Finance has, and has discovered just how much Canadian consumer debt is impacting the nation’s economy.

    Check out this recent release from Yahoo Finance, “Household Debt Overhang Holding Back Canada’s Economy”: https://ca.finance.yahoo.com/news/household-debt-overhang-holding-back-124451782.html. According to the article, Canada was able to overcome the recent financial crisis thanks in part to consumer spending. A hot housing market and consumer spending meant that our economy was able to rebound far quicker than the U.S., but at a substantial cost. Now, thanks to high Canadian consumer debt, individuals are spending less and paying off more, meaning that economic growth won’t reach the levels initially anticipated.

    Furthermore, “Canada’s disposable household debt-to-income ratio is at a near-record high of 164.0 percent. By contrast, U.S. households reduced their indebtedness in the wake of the crash.” Clearly there are drawbacks to having dealt with the crash in a way that meant less economic meltdown for the average Canadian.

    If you are one of the many Canadians whose spending has led to a mountain of debt that now seems unmanageable, it might be time to start thinking about some viable solutions. Don’t get stuck barely able to make ends meet because of the interest on credit cards and the looming collection action being threatened by your creditors. Get in touch with a company today to find out what options exist to help you regain control of your finances.

    For more about Canadian consumer debt and taking back control of your money please contact DebtCare Canada today by calling 1-888-890-0888.

  • Why You should Never Go to a Bankruptcy Trustee in Ontario Without Representation

    Bankruptcy TrusteeA bankruptcy trustee is a court appointed officer. Their job is to administer bankruptcies and consumer proposals in Canada – and they do this by representing both you and your creditors. This means that they are expected to get as much as possible from you for your creditors.

    Take a look at the typical process and you will see how people get themselves in trouble:

    A trustee advertises a financial solution, and you contact them for help (thinking that because you have contacted them that they represent you). However, even though you are the one looking for assistance, they in fact represent both you and your creditors.

    Next, the trustee will pitch you on the financial solutions they can provide, which are usually bankruptcy or a consumer proposal. Since a trustee doesn’t make any money if you don’t sign up, things are often very pleasant at the beginning.

    At no point during this meeting will they tell you how they get paid, but it is important information. A trustee gets paid based on a tariff (a fee set by the government in the case of bankruptcy, a percentage in the case of a consumer proposal, a percentage of surplus income in the case of a bankruptcy) – this comes out of your monthly payment.

    How much you have to pay and the amount of your monthly payments in a proposal and bankruptcy depend on your income and assets – the more income and assets you have, the more you end up paying. In the case of a consumer proposal the amount of proposal you negotiate will be locked in once the proposal is accepted.

    In the case of bankruptcy you have to report your income to the trustee each month and they do a calculation called surplus income. If you have income above a certain threshold you will have to pay your trustee 50% of the amount that has exceeded the threshold. In bankruptcy, when there is surplus income (income over the amount defined by the Bankruptcy and Insolvency Act) your bankruptcy will go from being 9 months to 20 months which can make a huge difference.

    So, why is being represented when going to a trustee a much smarter idea? Because it gives you the chance to, firstly, openly discuss your information without reprisal or pressure to sign. This representation can mean negotiating a much lower proposal, or a much stronger financial picture with contingencies in place to help you bounce back quickly. Finally, when you have your own representation, you won’t have to deal directly with the bankruptcy trustee – that individual will handle most negotiations and correspondence for you!

    Before you call a bankruptcy trustee directly, call DebtCare Canada – we can help keep you protected. Contact us today by calling 1-888-890-0888.

  • Self Employed? Is a CRA Garnishment Going to Your Clients?

    Self Employed? Is a CRA Garnishment Going to Your Clients?

    CRA GarnishmentAnyone who is self-employed knows the many challenges that come with owning a business – and one of the greatest is dealing with the many complexities that come with the intricate tax process in Canada. Because of these complexities, many self-employed individuals find themselves owing money to the Canada Revenue Agency (CRA), for numerous reasons, and if unable to pay, face strict enforcement actions as a result. One of the most common of these is a CRA garnishment of your receivables.

    Here are some numerical facts when it comes to a CRA garnishment:

    The CRA can garnish up to:

    • 100% of subcontracted income
    • 100% of other income like pension
    • 100% of self-employed income

    If you are self-employed, the CRA can send a notice to your clients to direct your receivables to the CRA. This can cause significant financial hardship and stress, as well as the negative impact it can have on your client relationships.

    So, can you stop a CRA garnishment? It is difficult, but you do have options.

    1.     You can try to get the CRA to agree to stop, but know that the chances of this happening are slim to none. As far as the CRA is concerned, you owe the money and their job is to retrieve it. Also important to remember, in the process of trying to cooperate, many who attempt to negotiate divulge information to the CRA that can cause even more problems; providing financial disclosure can prompt further enforcement action, a frozen bank account or a property lien for example. This option should be avoided at all costs!

    2.     Consumer proposal. By entering into a consumer proposal you can immediately stop a garnishment – with the added benefits of stopping interest and likely reducing the size of your overall debt. However, there are a few caveats:

    o   If you have other creditors they will be included in the proposal too.

    o   If the CRA is your majority creditor, they have to agree to the proposal (if they don’t respond within 45 days they are deemed to have agreed).

    o   If you own a home and the CRA has a lien on it, this greatly complicates things.

    3.     Bankruptcy. Like a consumer proposal, this would immediately stop a garnishment, and is likely to stop interest and perhaps reduce the size of your overall debt. Things to keep in mind:

    o   You have to report income and your financial circumstances to a trustee every month – if your financial situation improves you will have extra repayment added which has to be paid before you can get discharged.

    o   Your payment to the trustee depends on your income and can change if there is an increase in income.

    o   If you own a home and the CRA has a lien on it, this greatly complicates things.

    If you are suffering from a CRA garnishment of your receivables, there are options to have the garnishment lifted while keeping yourself protected from further enforcement action. DebtCare has the tools and experience to help. Contact us today by calling 1-888-890-0888.

  • Will a Consumer Proposal Ruin my Credit?

    Consumer ProposalMany of us have been there – finances are tight, and even making the minimum payments on your credit products has become difficult. Maybe you are opting to make payments on one card each month, or are continually increasing your available limit just to be able to keep your head above water. Whatever the situation, know that there are solutions, one of which is the consumer proposal.

    Maybe you have already looked into this option but are asking yourself, ‘will a consumer proposal ruin my credit.’ Among the many things to be considered with this form of debt relief, the impacts are important. That being said, it definitely isn’t the only thing you should be thinking about.

    The Process: The process is fairly straightforward. A consumer proposal must be conducted by a trustee in bankruptcy, but it is always smart to have your own representation – someone who can negotiate on your behalf and keep your best interests in mind. A proposal is drawn up that addresses your debt, and this is forwarded to your creditors. Once the majority of your creditors have approved the proposal (they have 45 days to accept or reject it), it is filed and you begin making monthly payments to a trustee, and that is then handed over to your creditors. Most proposals are made over five year terms, but can be paid off in full at any time.

    The Benefits: There are many benefits of a consumer proposal. Firstly, it reduces your debt. Since you make a proposal to your creditors with an amount that matches your budget, this can mean a significant reduction in the overall amount that you owe. Secondly, it stops interest. Often, especially with regard to credit card debt, it is the interest that kills you, and so with a consumer proposal the interest is stopped and you can actually make significant payments of the principal, rather than the majority continuing to go to interest. Furthermore, a consumer proposal means a single monthly payment, rather than a bunch of payments on different days (again, a great deal of which goes directly to interest).

    The Impacts: Will a consumer proposal ruin my credit? Firstly, if you are considering a consumer proposal, your credit may not be in the best shape as it stands currently, and so before getting even further in over your head, it is best to gain control of your finances. The consumer proposal, like any credit activity, will show on your credit. It will remain on your report for 3 years following the date it is paid in full (so it is better to pay it off quickly). Although it is not considered positive credit activity, you can actually start rebuilding your credit as soon as you enter into a consumer proposal.

    If you are thinking about a consumer proposal but are worried about the impacts on your credit, please contact DebtCare Canada today for a free consultation: 1-888-890-0888.

  • The Challenges of Dealing with Debt Through a Divorce

    In Canada, divorce is one of the biggest causes of debt, and debt is one of the biggest causes of divorce. No matter how you look at it, financial strain wreaks havoc on your life in a number of different ways. When you separate, and go from a 2 income household to a 1 income household, it can become incredibly difficult to navigate this change in your financial situation. Maintaining a hold on your current debtload, meeting minimum payments, even establishing and sticking to a realistic budget can be really tough. Check out this video of DebtCare’s own Pam Shimmerman, our financial restructuring specialist. With a legal background, Pam has helped countless individuals deal with the debt that comes from divorce.

    One of the best things that you can do once a divorce is initiated is to take a detailed look at your household income and expenses, as well as your current debt load and future financial goals. Working through these items with a financial specialist can help ensure stability and can help you to achieve your financial goals. If you are in the midst of a divorce and would like some help dealing with the financial repercussions, please contact Pam for a free consultation. You don’t have to do it alone. Please call 1-888-890-0888 or email Pam directly at pshimmerman@debtcare.ca.

  • Is Credit Counselling in Canada a Debt Consolidation?

    Credit Counselling in CanadaWe have all heard the commercials on the radio and television talking about debt consolidations and credit counselling. When you have a debt that is becoming increasingly difficult to pay, these may seem incredibly enticing – but it can be difficult to know what each one means, or if they are in fact even different. So, is credit counselling in Canada the same as debt consolidation, and if not, what is the difference?

    Firstly, no, credit counselling is different from a debt consolidation. Many people confuse the two, but there are major differences. Both can represent significant debt relief, but each one requires a specific process that needs to be followed properly in order to be successful.

    Credit counselling in Canada – credit counselling is usually not for profit and is usually funded by the bank or your creditors. With a credit counselling proposal, you are essentially going to your creditors and asking to have the interest on your debt frozen and for them to accept a reduced monthly payment based on your budget. If accepted, you make one payment to credit counselling and they disperse the money to your creditors. This means a single monthly payment for you, that you can afford, and drastically increases your creditors’ chances of being paid, on time, each month.

    Some things to keep in mind with credit counselling: it does not reduce your overall debt. Although your interest is frozen and your payments may be reduced, you are still on the hook for the entire amount. Additionally, with credit counselling in Canada, the damage to your overall credit rating is the same as in bankruptcy – all ratings turn into R7 and I7 for a period of 3 years from the date the proposal is paid in full.

    Debt consolidation – A debt consolidation is when you are approved for a loan to cover the entirety of your debt. You then pay off your debt completely, and just pay that one loan on a monthly basis. With a debt consolidation, many of the same benefits are visible, such as one monthly payment and reduced interest, but without the damage to your credit.

    When you have financial challenges and you want to consolidate debt into a single payment, you have a few options, including a debt consolidation loan or mortgage financing. Other options for debt relief may include a consumer proposal or bankruptcy. You viable options will depend on a number of things, including your credit, assets, budget and cash flow, and so it always helps to speak to a debt specialist to determine all of your options.

    For more about debt consolidations and credit counselling in Canada, please contact DebtCare Canada today by calling 1-888-890-0888.

  • Wage Garnishment Blog Series Part 3 – Wages Garnished by Other Sources

    Wage GarnishmentIn the first two blogs of our wage garnishment series we discussed how wage garnishments work when you owe money to the Canada Revenue Agency or to a creditor. While these are two very common forms of wage garnishments, there are other forms of wage garnishments that can quickly become severe financial burdens.

    A very common ‘other’ form of wage garnishment is a wage garnishment related to unpaid child support. In Ontario, if you fail to pay child support, your wages can be garnished. The typical process is as follows: once your spouse has given you notice, their lawyer or the Family Responsibility Office will make an application to the court to garnish your wages, and once approved, your employer will receive notice and be legally required to do so. If there is back child support your wages can be garnished up to 50%.

    Getting your wages garnished by Family Responsibility should never come as a surprise and you should always ensure that your child is financially cared for. When it comes to a wage garnishment from Family Responsibility, there is nothing you can do to reduce or stop this, other than going to court. These types of garnishments are unforgiving, and even if you are financially strapped and finding it incredibly difficult to pay, they will often throw you further into financial turmoil.

    So, if you are having your wages garnished as a result of unpaid child support, are you then stuck between a rock and a hard place? Are there really no options to help you pull yourself out of a financial hole? No, you do have options, but these may mean looking at dealing with your other debts as quickly as possible to free up the cash to finally settle up those Family Responsibility payments.

    What options are available? If you struggle with what seems like a mountain of debt, including debts for child support payments, a viable option may be a debt consolidation or a consumer proposal. Both of these may represent significant relief, as well as a single monthly payment. Just remember, if you are approved for a consumer proposal, payments to Family Responsibility cannot be included, but the proposal can free up potential monies to pay that debt and lift a wage garnishment.

    If you are facing a wage garnishment of any kind, DebtCare Canada is here to help. For information about the many different options that may be available, please contact us today by calling 1-888-890-0888.

  • Wage Garnishment Blog Series Part 2: Wages Garnished by a Creditor

    Wage GarnishmentMany people run into financial problems and can’t pay their creditors. Often these debts end in a wage garnishment. Last week we looked at Canada Revenue Agency wage garnishments, so this week we thought we’d explore what it means when you are faced with having wages garnished by a creditor other than the CRA.

    When you have a debt that you have continually had trouble paying down, failing to meet even the monthly minimum payments month in and month out, your creditors will quickly tire of this and will eventually take enforcement action in an attempt to get their money. Sure, if you can’t pay, you can’t pay – your creditors can’t draw blood from a stone – but that doesn’t mean they won’t try!

    If your creditor has no security on your loan, they can do one of two things to try and get what they are owed:

    • Sue you in Small Claims Court
    • Send your file to a 3rd party collection agency for collection – they can in turn sue you in Small Claims Court.

    Remember – aside from the CRA, a creditor cannot garnish your wages without a court order, so Small Claims Court is a necessary first step.

    If you are sued in the Ontario Small Claims court, your creditor has to serve the papers on you. Once you have received the papers, you have 2 options as far as filing a Defense (and only 40 days to do so):

    a)     If you file a Defense a date is scheduled for you to make a settlement and repayment terms with your creditor. If a settlement is reached, as long as you don’t breach the terms, the matter is settled. If you breach the terms the creditor can get a default judgment against you. If you don’t make a settlement the matter will proceed to trial; it should be said that most disputes are settled at the pre-trial settlement conference.

    b)     If you don’t file a Defense, the creditor can obtain Default Judgment against you. Once they have this, they can file a Notice of Garnishment with the Ontario Small Claims Court and also send it to your employer. The maximum wage garnishment from the Ontario Small Claims Court is 20% of your earnings. Your employer must then begin remitting the specified percentage of your income to the court. The court holds the money for 30 days and then sends the money to your creditor.

    If your wages are being garnished because of a Small Claims Court wage garnishment, and you can’t make ends meet, there are only 2 ways to reduce or stop a Small Claims Court wage garnishment.

    1. File a motion with the Ontario Small Claims Court – include and present your financial information and ask the judge to reduce the percentage of the garnishment or mediate a voluntary payment plan that you can afford with the other side. You may need a paralegal to do this as it will involve completing court forms and attending a court date.
    2. Speak to a financial restructuring professional – this could involve discussing options such as a consumer proposal, which will immediately stop a wage garnishment imposed through the Ontario Small Claims Court.

    If your wages are being garnished and you don’t know what to do, DebtCare can help. We have the resources to help you pay off those debts and get you back on strong financial footing. Call us today at 1-888-890-0888.