debtcare.ca

Category: Blog

  • Debt Relief 101: Refinance Your Mortgage to Consolidate Debt

    Consolidate DebtWhen your debt begins to climb at a rate that seems to be spiraling out of control, or if you are just tired of shelling out money without seeing totals decrease, it might be time to consider a different approach. Making minimum monthly payments is not actually going to get you out of debt – and realizing this, many Canadians have chosen to refinance their mortgages as a way to consolidate debt – but is this the right option for you?

    There are several reasons why refinancing your mortgage to consolidate debt can be a smart option. Firstly, because you are consolidating you are getting rid of that laundry list of monthly payments and consolidating them into one, tidy payment. This can make keeping track of payments far easier – and less stressful. Secondly, you can save huge on interest. If you are carrying a number of different credit products, all with varying interest rates, all applied at different periods, you are paying out far more than if you have one larger total at a single interest rate.

    With these major positives, there have to be some negatives, right? Well, as appealing an option as mortgage refinancing may be, its benefits are only open to those who qualify. What do we mean? Well, since mortgage refinancing requires upping the lending limit on your current mortgage, you have to actually have a mortgage to qualify (so renters are out). You can’t get a mortgage to consolidate debt, so unless you own your home, this option is not available.

    Another issue that many have when attempting to refinance is the fact that your credit needs to be great – but if you are maxed out or have missed payments, the lending institution isn’t necessarily going to have much faith in your ability to repay your debt. Yet another deals with the fact that stricter CMHC lending guidelines have decreased the total refinancing limit to 80% of a home’s value, so if your debt will put you over this threshold, a total consolidation is not feasible.

    So, is mortgage refinancing to consolidate debt the best option for you? Despite the downsides associated with qualifying, if you can secure funding it may very well be the most intelligent option. It is also better for your overall credit versus a consumer proposal or bankruptcy – so that is also very attractive.

    When you are considering the various options available to get out of debt, mortgage refinancing is one that should be on your list – just be prepared if your credit isn’t stellar or if there is no equity in your home.

    For more about mortgage refinancing to consolidate debt please contact DebtCare by calling 1 (888) 890-0888.

  • Get Out of Debt: Five Easy Steps to Get You Started

    We’ve all heard that myth that dreaming about your teeth falling out means you’re worried about money – but what if Mr. Sandman leaves you checking your teeth every single morning? If money is all you can think about, it might be time to make some changes. Want to get out of debt but just not sure where to start? We can help. Here are 5 tips to help get you started!

    1.     Create a budget and track spending. If you don’t know what you owe, or where your money is going, you can’t realistically make a plan to get out of debt. Inventory your debt totals, create a realistic budget and track your monthly spending in order to motivate and eliminate.

                           blog

    2.  Pay more than the minimums. When your credit card bill comes and your minimum payment required is $50, that doesn’t mean that $50 will be taken from your total owing. The majority of this total goes right to interest, so stop paying only the minimum on your credit cards and pump up those payments as much as you can!

    3.     Stop spending. Sure, this may seem like common sense, but unless you actually do it you are not fixing anything. Look back at that tracker and identify areas that could benefit from a slash. Or, if you can’t seem to resist temptation, get rid of that credit card, take it out of your wallet, or find another effective way to stop using it!

    blog 1

    4.     Get debt help. Worried that you can’t tackle your debt on your own? You don’t have to. Dealing with debt can be tough, so why not research and get in touch with a reputable, professional debt management firm. There you can get advice on debt relief or find out more about solutions to actually get rid of the money owed.

    5.     Stay focused. Don’t just say you are going to get out of debt – do it. Stay focused on the end goal, not on how tough it is to get there –most good things don’t come easy! Use your monthly tracker (and those decreasing numbers) as motivation!

    blog 2

    Get your debt under control and eliminate your financial stress with these tips. Take it one step at a time and that mountain will soon become a molehill!

    For more debt reduction tips please contact DebtCare Canada by calling 1 (888) 890-0888 or visit us online at www.debtcare.ca

  • Helping Out – Finding the Right Debt Management Firm

    Debt ManagementNo matter how you look at it, debt is never something that anyone wants to deal with – both having it and getting rid of it – but it is a reality for the majority of the population. That being said, some individuals are able to conquer their debt problems on their own, eliminating the stress that comes with it. However, for others, when debt becomes insurmountable, turning to a debt management firm is the smartest solution. But how do you know which firm you can trust?

    We have all heard the ads on the radio and seen the commercials about companies offering various debt reduction or debt elimination strategies – but not all of these are of the same ilk. Here is a list of characteristics to look for when researching the right debt management firm.

    Experience – When it comes to your money, it is never a good idea to just go with the first company you find. Make sure that the firm you choose to work with has the experience and reputation to back you up. Is it a new business, one taking advantage of higher than average Canadian consumer debt levels, or is it one that has years of professional experience under their belt? The choice should be obvious here.

    Options – Make sure that the company you choose to go with can offer you a number of different options for debt relief. A company that deals solely in bankruptcy is never the right choice. Make sure that your options are explained to you in a way that you understand, and that in the end the choice is left up to you. Ask questions and get the pros and cons (there are always both).

    Consultation – The right company should offer some form of consultation, and the best companies will offer this for free. If you call a company and a solution is set up for you without any consultation at all, chances are that company does not have your best interests at heart. Thoroughly working through your unique situation is the only way to reach a realistic and achievable solution, so make sure that this is offered.

    Code of Ethics – If the company you choose doesn’t have a code of ethics, you may not be as protected as you should be. Having a set standard to follow means that your information is protected, that you are getting fair and unbiased treatment, and that you are being given the tools to create an enduring plan for financial stability no matter the route you choose to take.

    Stop stressing about your debt and solve the problem. The right debt management firm can help you – just make sure that it is a reputable one with the experience to get the job done right!

    To find out about the debt management solutions available to you, from a firm that you can trust, please contact DebtCare Canada today by calling 1 (888) 890-0888.

  • Statistics Canada: Report on Current Canadian Consumer Debt Levels

    Canadian Consumer DebtStatistics Canada released its latest report on figures regarding personal wealth and debt levels recently, and the numbers are not as promising as some financial experts would like – in many cases they are actually worse. What are these numbers, and what do they tell us about Canadian consumer debt levels?

    By the end of the second quarter of 2013, Canadian mortgage debt had reached $1.1 trillion – but this number is not included in consumer debt – or rather, debts such as credit cards or personal loans. In contrast, consumer debt reached a high of $500 billion.

    A key measure of consumer debt is the debt-to-income ratio for each household. This means the amount of household debt compared against disposable income. As StatsCan reported, the second quarter of 2013 hit a record high of 163.4% – that is up from 162.1% for the first quarter of last year, and is a reversal of the trend that saw the ratio decline in the previous 2 quarters.

    So what do these numbers actually mean? Well, according to financial experts, this is a good indication that Canadian households are still spending, on credit, but at a slower rate, which is a good thing. That being said, the key factor here is that the spending continues, meaning Canadian consumer debt levels continue to grow.

    Also, while some experts say that this debt is not unmanageable, a recent Royal Bank survey conducted by Ipsos Reid found that consumer debt is still keeping many Canadians on edge – 38% polled stated they were anxious about their current debt load. If you find yourself in this category you are clearly not alone. And although experts seem to think that Canadians are going to continue to curb their spending, this may not be as feasible for all as they would perhaps like.

    So, how do you measure up and what are your options? Are your debt levels on par with the average Canadian, or are you a bit more on the ‘stressed’ side. If your debt is keeping you up at night it might be time to think about a different solution. And again, you are not alone here either. The same RBC poll found that many Canadians are going a bit farther than just making a budget or using different tactics to decrease debt, stating debt consolidation has become a big favourite for many looking to reduce their overall debt load and save on interest.

    Want some help coming up with a solution – DebtCare can discuss the many options regarding Canadian consumer debt and how to eliminate yours. Call us today at 1 (888) 890-0888 or visit us online at www.debtcare.ca

  • Personal Debt Management – How You Can Regain Control of Your Finances

    Debt ManagementEven as the Canadian economy stabilizes, many Canadians continue to find themselves dealing with the difficulties brought on over the past few years. Debt has become, or rather continues to be, a major stressor for countless individuals. Although some Canadians have been able, over the past year, to climb out of that financial black hole, others still struggle to find a foothold.

    If you are in the latter category, does this mean that you are forced to continually struggle with debt? No. There are many personal debt management options that exist which can help you get out of debt. Here are the main ones – as well as a brief description of how they work.

    Debt Consolidation: Consolidating your debt means just that – consolidating all debt totals into one. This is usually done through a loan. With a debt consolidation loan, all other debts are paid off, and you are required to make only one payment each month. There are a number of benefits to this type of debt solution, including the convenience of a single monthly payment and the amount of total interest saved through consolidation (the interest rate for consolidation loans are often far lower than other types of debt, ie. credit cards).

    Depending on your circumstances, that can be a few difficulties with a debt consolidation. Since you are essentially getting another credit product, your credit will likely need to be in pretty good shape – but if you are struggling with a mountain of debt or having a hard time making monthly payments, your credit may not be stellar. Also, if you do have a large amount of debt, securing funding to consolidate all of it may also prove quite difficult.

    Consumer Proposal: A consumer proposal is essentially a proposal made to your creditors to reduce the amount of your debt – the total of which is determined based on your income and ability to make the monthly payments. It is conducted by a trustee in bankruptcy and is an official process (meaning you cannot do it on your own). Once accepted by the majority of your creditors, your debt will be reduced and you are required to make manageable monthly payments to pay off the debt in a much shorter period of time.

    There are many positives to a consumer proposal. Firstly, it reduces the total amount that you owe. Secondly, it consolidates all of your monthly payments into one, single monthly payment. It will also stop any collection enforcement action against you and can be paid in full at any time. That being said, it will impact your credit rating, but if you are considering a consumer proposal this has likely already taken place.

    Bankruptcy: Although often considered the least popular, for many individuals bankruptcy is the only realistic option. In a bankruptcy, your creditors receive notice that you have declared and your debts are cleared. Bankruptcy involves a court determination that your assets are to be taken over by a trustee for the benefit of your creditors. During your bankruptcy you do have some responsibilities, including proving income monthly, attending credit counselling sessions, and making minimum monthly payments, but collection enforcement actions are halted against you.

    Depending on your own unique situation, one of these may be a very attractive debt solution. Our best advice? Seek out some professional debt management guidance in order to choose the option that best suits your needs and circumstances.

    For more on these and other debt management options, please contact DebtCare Canada today by calling 1 (888) 890-0888.

  • Canadian Consumer Debt – How Do You Measure Up?

    Check out this great infographic from Royal Bank regarding consumer debt in Canada. Where do you stand?

    Jan 14 - Consumer Debt Infographic

     

     

     

     

     

     

     

     

     

  • New Year, New Plan – Start by Getting Out of Debt!

    Getting Out Of DebtHappy New Year Everyone! Time to get those resolutions started – and for many of us this means getting out of debt! With holiday shopping out of the way (and the subsequent credit card bills screaming at us from the mailbox), you can actually get down to business and rein in that spending. This year, start with a plan that you will actually be able to stick to, rather than just casting it aside a few weeks in. The only way to get your debt under control is to tackle it head-on.

    Tip #1: Examine. Start by looking over all of your finances – usually not a fun experience – but something that cannot be avoided. In order to start fixing the problem, you have to know what the problem is. Go over all of your bills and make a list of totals owed for each, as well as a grand total (ouch!). This will also help you keep track of monthly bills and can be a great motivator when those totals start to decrease!

    Tip#2: Assess and set priorities. Now that you know how much you owe, and to whom, step 2 is to figure out which items are the most important. We are not saying here that you should pick and choose which bills to pay – far from it – but rather which can receive a larger chunk of your monthly income. For example, if you choose to tackle the highest debt first, this may mean making only the minimum monthly payments on smaller cards but a much larger payment on the one with the highest amount owing. Or perhaps interest is the biggest factor, so make that card the priority.

    Tip #3: Set a budget. Now that you’ve got the worst part (for most of us) out of the way, it is time to establish a realistic budget. This means taking into account all of your monthly spending and income. Doing this should help you eliminate some of those things that are a tad frivolous, or to limit yourself in those areas that see a lot of unnecessary or out-of-your-budget spending.

    Tip #4: Stick to it. Perhaps this may sound easier said than done, but you have to be diligent. Debt isn’t going to go away on its own (chances are pretty high that, if left alone, it will only have the opposite effect). Try to think about ways to keep track every day, and make sure that you are tracking your spending and taking note of decreasing totals.

    Tip #5: Can’t see a light at the end of the tunnel – get some help! If you have done these things but still can’t see a way to continually meet minimum payment requirements, stop stressing and get some help. A debt management firm can offer a number of different options to help you get out of debt, including debt consolidation, consumer proposal, or bankruptcy. These opportunities can often mean significant savings as far as interest, and can help you get the debt relief you need to keep your finances afloat.

    Getting out of debt can be difficult, but it doesn’t need to be a nightmare. This year, try to stay strong and keep to that resolution. DebtCare can help – call us today at 1 (888) 890-0888.

  • Investment Advisors: Keep Clients’ Investments Protected with a Debt Management Company

    Debt ManagementAs a financial or investment advisor your clients look to you for protection: to protect their family in the event of a death, to protect their wealth, to protect themselves when the time comes to retire and more…  You are often the first person that a client will turn to in good times and bad. Sometimes people fall on hard financial times. A divorce, a job loss or even taking a tumble in the stock market can see someone who was otherwise on solid financial footing finding it difficult to make ends meet.

    Most people want to do the right thing! They want to pay their bills, provide for their families and no one wants to make tough financial choices when they fall on hard times.

    Unfortunately, sometimes difficult financial times lead people to make the wrong financial choices. All too often we see people who have a tax problem or excessive debts owed to creditors coming to us after they have liquidated their investments, giving all their money to their creditors in an effort to pay their obligations – yet they still find themselves owing more than they can pay, leading them to file a consumer proposal.

    The challenge with this is that most people don’t know that even in a consumer proposal many of their assets like their home, vehicle and yes some investments like RRSPs can be legally protected.

    Oftentimes people see a consumer proposal as a last resort – when really it is a viable option for getting out of debt that leads to quick recovery times where credit is concerned. If you have a client with financial problems the best thing to do is get them an unbiased financial evaluation from a financial consultant that specializes in consumer proposals. This way all options can be presented and strong contingency plans can be put in place which will better protect your client in the long run.

    Another common occurrence is financial and investment advisors who don’t understand insolvency and submit their clients right into the clutches of a trustee in bankruptcy. This could be a big mistake. When you send your client directly to a trustee, your client is not the trustee’s client – they actually represent the interests of your client’s creditors. With that said, without your client they would not be in business so there is a high motivation to make your client feel secure and sell their services. While they may make your client feel secure at the time that they sign on the dotted line it doesn’t mean your client is safe, and the story at the time of signing can change later.

    Financial consultants offer a wide range of financial services so they can present all options. Forging a strong relationship with a good financial consultant who specializes in consumer proposals will provide you and your clients with huge value in the long run.

    For more information about how financial consultants can help you to protect your clients please call Michael Goldenberg at DebtCare at 416-907-2582 or visit www.debtcare.ca.

  • Don’t Be Fooled: The Truth About Pay Day Loans

    Payday LoansIn the world of credit, a payday loan has become an increasingly popular form of financial funding. The ease with which they can be obtained makes them seem attractive to many who need quick cash. The ability to walk into a payday loan location and walk out with cash can be very tempting – but beware. This week’s school for debt relief is all about the truth about pay day loans.

    What is a pay day loan? Pay day loans are those loans given by an institution that is not a bank, and are generally short term. They are called payday loans because the borrower typically borrows just enough money to get through to the next payday, at which time repayment is due.

    These are just short term loans, so what’s the harm? Well, when you take out a pay day loan you are agreeing to pay back the full amount in a very short period of time (usually by the time you next get paid), coupled with a fee that can range from 20 to up to 500 percent.

    Think about it this way: Let’s say your car breaks down and the total cost of the bill is $1000 (unfortunately a very common occurrence). However, your finances are tight right now so that $1000 is not readily available but you can’t get to work without your car. So you decide to go to a pay day loan company to borrow that $1000 for a period of 1 month. Let’s say that company charges $20 per $100 borrowed (a typical fee). That means that on top of the $1000 you owe $200 in fees. So, at the end of the loan period you owe $1200. Hmmm, if you didn’t have that extra $1000 at the beginning for the month, are you likely to have it at the end. So you roll it over, getting charged an extra $200 for a month’s extension…the loan doesn’t seem so small now, does it?

    If you require a short term loan, initially pay day loans can seem very attractive. But once you have broken them down and added the fees and interest, it is clear why these credit products are less than beneficial, no matter how you look at it. Pay day loans should be avoided at all costs – their costs to you are just too high.

    If you have found yourself stuck in a pay day loan cycle and need help getting out please contact DebtCare Canada today by calling 1-888-890-0888.

  • Be in the Know: Checking and Understanding Your Credit Score

    Credit ScoreNo matter the state of your finances, understanding your credit score is a very important part of keeping financially fit. This is especially important when you are dealing with debt or attempting to rebuild credit.  Not knowing what certain aspects of your credit score represent can lead to trouble acquiring credit products, or errors not reported can be incredibly difficult to deal with.

    Understanding your credit score. Firstly, what is your credit score? This is the number applied by one of the major credit reporting agencies, derived from a complex calculation of your financial behaviour, most importantly your borrowing behaviour. This includes where you have borrowed from, how much you have borrowed, and your repayment habits. Credit products such as credit cards, personal loans, mortgages, car loans, even personal cell phone contracts are included in this calculation.

    So what does the score mean? When you (or a potential creditor) request your credit score, this is the number that represents those above calculations. Your number will be on a scale from 300 to 900. 300 is the lowest score, and represents credit that is in very poor standing. 900 is the highest score, and represent pristine credit behaviour.

    This is how national credit reporting agency Equifax ranks scores:

    –        300-559 – poor
    –        560-660 – fair
    –        660-724 – good
    –        725-759 – very good
    –        760+ – excellent

    Your credit score will fall into one of these 5 categories, and it is based partially on this number that a creditor will decide whether or not to extend credit to you.

    What impacts your credit score? Anything that you do financially with regard to credit gets reported. This includes any new credit products you obtain, payments made and payments late or missed, any credit inquiries made both by you or a potential creditor, as well as any debt reduction strategies, including claiming bankruptcy or a consumer proposal.

    Once you are better equipped to understand your credit score you might be concerned about what this number means. But don’t worry. If your credit score is less than stellar you should work on changing this – it just might mean seeking out some help. Getting rid of debt and ensuring that your monthly financial obligations are met – on time, every month – is a great place to start. Halting any further credit seeking is also a good idea.

    Your credit score changes all the time, based on how you behave credit-wise, so be sure to keep that in mind. If you need help getting that number back up, or want help getting rid of your debt so that you can focus on increasing your score, consider working with a professional debt solutions company.

    For more information about understanding your credit score and how to get it out of the red please contact DebtCare Canada today by calling 1-888-890-0888.