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  • Thinking of Filing for Bankruptcy or a Consumer Proposal in Canada? You’re Not Alone

    Have you considered filing for bankruptcy or for a consumer proposal in Canada? If so, you’re far from the only one.

    Insolvency statistics show that bankruptcies and consumer proposals continue to be popular debt management options for Canadians throughout 2018.

    Here’s exactly how many Canadians are filing for bankruptcy or filing for a consumer proposal:

    2017 (Total Across Canada)

    Total: 125,807

    Bankruptcies: 60,669 (Personal Bankruptcies: 57,969, Business Bankruptcies: 2,700)

    Consumer Proposals: 65,138 (Personal Consumer Proposals: 64,229, Business Consumer Proposals: 909)

    Top Three Highest Provinces:

    Quebec – Total: 43,731, Bankruptcies: 24,210, Consumer Proposals: 19,521

    Ontario – Total: 39,045, Bankruptcies: 15,968, Consumer Proposals: 23,077

    Alberta – Total: 13,481, Bankruptcies: 5,139, Consumer Proposals: 8,342

    First Quarter of 2018: January, February, March

    Total (Canada): 31,327

    Bankruptcies: 13,863 (Personal: 13,163, Business: 700)

    Consumer Proposals: 17,464 (Personal: 17,234, Business: 230)

    Top Three Highest Provinces:

    Quebec – Total: 11,301, Bankruptcies: 5,664, Consumer Proposals: 5,637

    Ontario – Total: 9,507, Bankruptcies: 3,638, Consumer Proposals: 5,869

    Alberta – Total: 3,463, Bankruptcies: 1,227, Consumer Proposals: 2,236

    Second Quarter of 2018: April, May, June

    Total (Canada): 33,534

    Bankruptcies: 15,450 (Personal: 13,163, Business: 700)

    Proposals: 18,084 (Personal: 17,234, Business: 230)

    Top Three Highest Provinces:

    Quebec – Total: 11,109, Bankruptcies: 5,930, Consumer Proposals: 5,179

    Ontario — Total: 10,435, Bankruptcies: 4,202, Consumer Proposals: 6,233

    Alberta – Total: 3,884, Bankruptcies: 1,343, Consumer Proposals: 2,541

    Compared to the first and second quarters of 2017, the first half of 2018 is keeping pace. The total number of insolvency filings are slightly down, as are the total number of bankruptcies filed. However, the total number of consumer proposal filings are slightly up, indicating that more Canadians are choosing this option.

    If you are considering filing for a consumer proposal or for bankruptcy, it’s important to know the difference.

    Consumer proposals:

    • Are for unsecured debts less than $250,000 (not including mortgage debt).
    • Make a settlement offer to your creditors that the majority of creditors must accept.
    • Generally, leave assets intact.

    Bankruptcies:

    • Are for any amount of debt.
    • Clear most unsecured debts and potentially some secured debts, such as a mortgage or car loan, if the assets are seized.
    • Could result in losing assets, such as your home or your car.

    For more differences, see this blog: How is a Consumer Proposal Different from a Bankruptcy?

    Both consumer proposals and bankruptcies must be filed with a Licensed Insolvency Trustee (LIT, or formerly known as a Bankruptcy Trustee). However, they will take a portion of the fee that you pay. They aren’t necessarily ‘on your side’ — they are more of a facilitator for the process.

    Before you file, you need an advocate who represents you and only you. At DebtCare, we provide just that. We can represent you when filing for bankruptcy or for a consumer proposal, and we can also make sure you have eliminated all other debt consolidation strategies before filing.

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

  • TREB Has to Make Sold House Prices Public – What This Means for You

    An important court case involving the Toronto Real Estate Board (TREB) could have big benefits for consumers when it comes to sold house prices.

    For nearly seven years, TREB has been trying to keep sold house prices private — meaning only real estate agents or other mortgage professionals could access those figures.

    But on August 23, 2018, the Supreme Court of Canada turned down TREB’s appeal to keep home price data private.

    This means that consumers may be able to see historical sales listing data and prices online, whereas before that data was only available to real estate professionals.

    How does this affect the average consumer? It could be a big help. Consider the following:

    • With access to historical sales data, you’ll be able to see how much your house has sold for in the past.
    • You’ll be able to see how many times a house has sold in the past.
    • You’ll be able to see how much houses in your neighbourhood sell for to get an approximate idea of your home value.
    • If you’re considering putting an offer on a home, you’ll be able to see how much it has sold for in the past.
    • There will likely be greater competition and innovation in the Greater Toronto Area (GTA) real estate market, which could have a positive affect for consumers.

    This decision only affects GTA home data currently, but it may spread to other Canadian cities. Many real estate boards were watching the TREB court case to determine their own action. Now that a legal precedent has been set, it’s likely that other boards will follow suit.

    Similar real estate data has been available publicly in the U.S. for the past 10 years.

    As Canadian interest rates increase and new mortgage stress test rules are in place, it’s more important than ever for homeowners or potential homebuyers to understand the real estate market. This could help you decide whether you should keep or sell your home.

    Time will tell how exactly the court order plays out, but we are calling this a victory for consumers.

    Interested in buying a home or selling your house? DebtCare Canada can help. We offer first mortgages, second mortgages, home equity loans, and more.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit https://debtcare.ca/.

  • Should You Get a Home Equity Loan to Pay Off Debt Before Interest Rates Increase Again?

    How confident are you that you could survive another Canadian interest rate increase? If your answer is “not very” perhaps it is time to consider getting a home equity loan to pay off debt.

    Since July of 2017, the Bank of Canada (BOC) interest rate has increased from 0.5% to the current 1.5%. Although the BOC held off on increasing the rate again in September of 2018, economists speculate that rates could go up as soon as October 24, 2018 — the next scheduled BOC announcement.

    Throughout the remainder of 2018 and 2019, experts predict that interest rates could reach as high as 2.25%. If that happened, would you be able to cope?

    Increasing interest rates affect all forms of unsecured debt — credit cards, lines of credit, unpaid bills, variable-rate mortgages, and more. Even some secured debts, like a fixed-rate mortgage, could be affected when it is time for renewal as Canadian mortgage rates have also increased along with the interest rate.

    This means that if you owe $10,000 on a credit card and are paying 1.5% interest, you would owe $10,150 with the interest calculated. However, if the interest rate were to increase — say to 1.75% — you would owe $10,175.

    That may not seem like much of a difference, but credit card interest rates are rarely that low, so you may be paying even more in interest. In that case, even an extra $25 could be a big burden. And many people have more than $10,000 worth of debt. Some have hundreds of thousands worth of debt; 1.75% interest on a debt of $100,000 would be an extra $1,750.

    Plus, the longer it takes to pay off a loan, especially one like a credit card debt without a repayment schedule, the more interest you will be charged. Imagine that extra $25 multiplied by 12 months — suddenly you would be paying $300 more during the year than you otherwise would have. Even if you can afford it, couldn’t that money be put to better use elsewhere?

    The solution is to deal with your debt before interest rates increase again. And you may just be standing on a way to pay it off — literally.

    If you own a house, you could potentially access financing to pay off your outstanding debts by taking out a home equity loan or refinancing your mortgage. You would likely be left with one monthly loan that you would have to repay, but you would have a fixed-interest rate. This way you would know exactly what you have to pay every month, so you could plan for the expense.

    Some debt consolidation options available through your home equity include:

    By consolidating debt through a home loan or mortgage refinancing, you could protect yourself against future interest rate increases and make sure you stay financially well no matter what the BOC decides.

    At DebtCare, we offer one of the most competitive financial programs to help people no matter their credit or income. Bad credit? No problem. Self-employed? No problem.

    Contact us today for a free consultation to find out more about using a home equity loan to pay off debt.

    Call 1-888-890-0888 or visit https://debtcare.ca/financial-products/.

  • Bank of Canada Prime Interest Rate Staying the Same for September 2018

    The Bank of Canada prime interest rate is remaining at 1.5% for September 2018.

    On September 5, 2018, the Bank of Canada (BOC) announced its decision to keep rates the same, referencing high gas prices, uncertain trade policies, and a stabilizing housing market.

    Canadian interest rates have increased four times since July of 2017, going from 0.5% to 1.5%. The last hike came in July of 2018.

    Interest rates affect all forms of non-fixed (variable) debt. This might include unpaid bills, lines of credit, variable-rate mortgages, and, of course, credit card debt.

    Credit card interest rates already tend to be very high — much higher than many loans. Added BOC interest rate increases would only bring that amount up more.

    Equifax Canada estimates that Canadians carry $599 billion worth of non-mortgage consumer debt, including credit cards, auto loans, and the like. They predict that the amount of delinquencies — people who can’t or don’t pay their debts on time each month — will increase by the end of 2018.

    Part of that prediction is based on a decline in the number of people who completely pay off their credit card bills each month. Even if you make the minimum payment every month, you will still be charged interest on the remaining balance.

    The September rate hold can give Canadians a chance to deal with outstanding debts — particularly credit card debt interest.

    Consider the following options for managing credit card debts, or other consumer loans, that you can’t pay off in full:

    • Seek a consolidation loan with a fixed-interest rate.
    • Don’t open up any more credit cards if you can’t pay the balances on existing ones.
    • If you have home equity available, consider using it to pay off outstanding debts.
    • Consider filing for a consumer proposal or filing for bankruptcy.

    At DebtCare, we can help you break free from your debt. We will assess your financial situation and make a plan to manage it before the next Bank of Canada prime interest rate increase.

    There is another BOC announcement scheduled for October 24, 2018. Many economists are predicting rates will increase again at that time.

    Don’t wait — get in touch with us before October 24.

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

  • How is a Consumer Proposal Different from a Bankruptcy?

    Consumer proposal vs. bankruptcy — what’s the difference?

    At first glance, they can appear similar. Both clear your debt, stop collection action, and can harm your credit. But when we get into the nitty-gritty, there are several big things that set them apart.

    1. Assets

    Bankruptcy: When you file for personal bankruptcy, your assets are on the line. There may be allowable exceptions, like a car beneath a certain value, but anything over that can be taken. Each province in Canada has specific exceptions.

    Consumer Proposal: When you file for a consumer proposalyour assets aren’t touched. Instead, an agreement is made with your creditors to pay an amount of money in lieu of the full payment, and if they accept your debt is cleared, collection action stops, and your assets cannot be seized. But you have to prove that it is more lucrative for your creditors to accept your consumer proposal than it would be for them if you declared bankruptcy.

    1. Cost and Payment Schedule

    Consumer Proposal: A consumer proposal payment schedule is designed for you. You make a proposal to your creditors, usually a percentage of your total unsecured debt, and then you create a schedule to pay back that percentage. These are usually fixed, monthly payments that are made over a term of 48 to 60 months (four to five years). You also must pay the Licensed Insolvency Trustee (LIT) who files your consumer proposal a portion for his fee.

    Bankruptcy: Bankruptcy payments vary as they are based on your income. The more money you make, the more you’ll have to pay. A first-time bankruptcy can be completed in as little as nine months. If you have surplus income (if your household income is over the allowed amount) it may be extended up to 21 months. You are also required to pay the LIT a portion for his fee.

    1. Credit Rating Impact

    Bankruptcy: If you claim bankruptcy in Canada, you will receive an R9 credit rating. This is the worst rating you can have. It will stay on your credit report for six to seven years after you are discharged, depending on your province. If you are discharged after nine months, then the credit rating might stay on your record for seven to eight years total.

    Consumer Proposal: With a consumer proposal, you will receive an R7 credit rating. It will remain for three years after you complete your payments. So, if you complete your payments in five years, the R7 credit rating will remain for eight years total (five years, plus three years after it’s completed).

    1. Monthly Duties

    Consumer Proposal: There are no monthly requirements with a consumer proposal, besides making your payments on time. You do not need to report any changes in your income. You have to attend two credit counselling sessions.

    Bankruptcy: You are required to complete a monthly budget for income and expenses and supply copies of your pay stubs to your Licensed Insolvency Trustee (LIT). You also have to attend two credit counselling sessions.

    1. Tax Refund

    Bankruptcy: You will lose all tax refunds or tax credits you are owed.

    Consumer Proposal: You keep all tax refunds or credits you are owed.

    1. Eligibility

    Consumer Proposal: Your total debt cannot exceed $250,000 (excluding a mortgage) and you must be able to afford to repay a portion of your debts. You are not guaranteed to be granted a proposal just by filing one. It must be accepted by the majority of your creditors. You need to prove that they would be better off with this arrangement than if you filed for bankruptcy.

    Bankruptcy: Any Canadian resident who owes more than $1,000 in debt and is insolvent is eligible to file for personal bankruptcy.

    When you’re choosing between filing for a consumer proposal or filing for bankruptcy, there is no clear winner. They both have far reaching consequences and will take years to recover from.

    You also need to consider the bigger financial picture and all your forms of debt. Both a bankruptcy and a consumer proposal can cover unsecured credit and debt, such as credit cards, unsecured bank loans, lines of credit, payday loans, and unpaid bills.

    But they won’t deal with secured debt, like your mortgage, secured car loan, or lease. They also won’t include debts like spousal or child support, court-imposed fines, and student loans that are less than seven years old. You will still have to pay those debts.

    If you’re in a position where you’re considering filing for either one, make sure you have explored all of your other options. There could be another debt management solution that works better for you, without the same repercussions. And if you do decide to file, make sure that you seek independent representation besides your LIT.

    Remember, LITs make money off of your consumer proposal or bankruptcy. You need someone who represents you — and only you — when you’re going through the process.

    At DebtCare, we provide just that. We can represent you when filing for a consumer proposal or bankruptcy, and we can also make sure you have eliminated all other debt consolidation strategies.

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

  • CRA Collections and You – How You Can Protect Yourself

    Canada Revenue Agency (CRA) collections can be financially and personally devastating. Whether you’re hit with a wage garnishment, frozen bank account, or lien against your property, the effects can be far-reaching. It might impact your ability to pay your regular bills, alert your employer or clients to your financial position, or put your assets in jeopardy.

    CRA collections can begin without warning and without a court order.

    Often, when a person is hit with a CRA collection action, they ask, “How did the CRA find out my personal information?”

    The answer, usually, is that you told them.

    If you’re talking to the CRA, you need to be careful about what you voluntarily disclose. They can’t begin collection action unless they know where to collect from. For example, your bank account can’t be frozen if the CRA doesn’t know where you bank.

    One of the ways the CRA gets your personal information is through financial disclosure forms. For instance, say you wanted to make a payment plan with the CRA to pay your tax debt. You might directly contact the CRA to do so. They may indicate that they are willing to accept a three-to-six-month payment plan based on $500 per month if you fill out a form providing financial disclosure.

    This form might ask for information about your income, income sources, expenses, assets, liabilities, where you bank, and more. And now they have all this information on file. Even if they accept your payment plan this year, they might not be so lenient if it happens again in a following year. And now they will know where to collect from.

    There’s another added danger of providing this information: once they have your data, the CRA could go back on their original payment plan offer and demand a much larger monthly payment based on what you’ve disclosed.

    They may accept the lesser monthly payment for three-to-six months, but if they demand more, or if you don’t meet the payment plan obligations, the CRA will have all of your personal financial information that you provided in the financial disclosure form and can proceed to take enforcement action against you.

    They can also get your banking information in other ways. For example, if you make a payment to the CRA using your main chequing account and you still owe money, expect your bank account to get frozen.

    You also might unknowingly provide personal information just by talking with a CRA agent on the phone. Remember, they are trained to seem friendly, so you feel comfortable talking with them and revealing personal details. But the friendship isn’t all it seems. Once they have what they need, expect the CRA to turn to collection action.

    All of these reasons are why many agencies advise people who have large tax debts not to deal with the CRA directly. The CRA may say they are willing to negotiate, but they are agents hired by the government to collect the tax debt from you. Their primary objective is to close your file, which can only happen if you pay the amount in full (or you end up filing for a consumer proposal or bankruptcy).

    If you know you owe the CRA and can’t pay in full, you need a plan before even initiating contact.

    • Don’t contact the CRA on your own.
    • Don’t attempt to negotiate with the CRA.
    • Don’t fill out any financial disclosure forms they provide or answer other personal questions when speaking with an agent over the phone.

    Instead, contact a financial consultant to explore your options so you can get your CRA tax debt cleared before collection action is started.

    DebtCare provides access to one of the only programs that can resolve a CRA back tax problem. We can help you before the CRA registers a lien against your home, issues one of your customers a requirement to payorder, or freezes your bank account.

    Contact us today for a free consultation at 1-888-890-0888.

  • Mortgage Refinancing Tips for Reducing Debt

    If you own a home and struggle with debt, you may have considered mortgage refinancing.

    As we’ve written before, if mortgage refinancing is on your mind, you may want to start the process now, before Canadian interest rates increase any further.

    But before you begin you need to make sure that you understand the process and are picking the mortgage refinancing option that is best for you.

    Below are some common refinancing options you may be considering.

    1. Refinancing First Mortgage

    First mortgage refinancing can be a way to assess your monthly mortgage payments and ask if they are still working for your lifestyle. Do you find you’re struggling to make mortgage payments? Or perhaps you have other forms of high-interest debt (credit cards, lines of credit, etc.) and are having trouble repaying those. If you have equity available in your home, then first mortgage refinancing may be for you.

    Consider the following scenario:

    You have a mortgage for $350,000 with Lender A at an 8% interest rate, and you have $25,000 in high-interest debt. You find that you can get a mortgage of $375,000 from Lender B with a 6% interest rate. You use the $350,000 to pay off Lender A, and the $25,000 to pay off your other debt, and then you repay Lender B over the long-term with a lower interest rate.

    But there are downsides to refinancing your first mortgage, too. If you’re breaking your current mortgage in the middle of the term, you might be subject to penalties. Your lender may charge you a prepayment penalty. For fixed mortgage rates this penalty is the greater of three months’ interest or the interest rate differential payment (IRD). For variable mortgage rates this is the equivalent of three months’ interest.

    You will also incur legal fees as a lawyer must change the financing on the title.

    1. Second Mortgage

    A second mortgage is an additional loan taken out on a property that’s already mortgaged. It doesn’t affect your first mortgage, so you won’t be charged for breaking your mortgage early. If you have good credit and more than 20% equity in your home, you may be eligible.

    A second mortgage often carries a higher interest rate than a first mortgage, but the interest rate is still lower than other forms of debt you might be paying off, like credit cards, car payments, or unsecured lines of credit.

    If you use a second mortgage to consolidate debt and make your payments on time, it could help increase your credit score.

    The big downside to a second mortgage is that most lenders will want to know you have good credit and a reliable source of income. A second mortgage is inherently riskier as you’ll now have two mortgages, so a lender will want to make sure you won’t default. And while you won’t be subject to fines for breaking your mortgage early, there may be other fees incurred during the set up.

    If you have equity available in your home and a plan to pay for your second mortgage debt, it could be a good option.

    How to Decide What is Right for You

    If you have good credit, at least 20% equity available, and a plan to pay off the debt long-term, a second mortgage can be a great option for debt consolidation. But you need to know how you will repay it. If your credit has been harmed because of excessive debt, a second mortgage can help you rebuild it so long as you make your payments on time.

    If your mortgage payments are too much, or you have equity available on your current mortgage that you want to access, then refinancing your first mortgage may be the best option. This can be a long-term solution that helps you get out of debt and save more money over time, but it depends on the interest rates you are eligible for.

    Both options include fees. A second mortgage includes appraisal fees, legal fees, a lender’s self-insured fees, and mortgage fees, plus interest on the loan. Refinancing your first mortgage includes legal fees and a potential pre-payment fee if you are breaking your mortgage early. Plus, if you change lenders, you may be subject to another fee.

    If Your Bank Says No

    If you have equity available, but your credit is bruised, you might not be able to get mortgage refinancing or a second mortgage with a prime lender. However, there are many non-mainstream financial institutions that may still lend to you, but you will need a good mortgage broker to get to them.

    Deciding what option is best for you comes down to your debt consolidation needs, your credit score, and your available equity. You don’t have to decide alone. DebtCare’s financial experts can help you take stock of your situation to determine what debt management method is best for you, or if there’s another option that may be even better.

    DebtCare offers one of the most competitive financial programs to help people no matter their credit or income. Bad credit? No problem. Self-employed? No problem. We can assist with first mortgages, second mortgages, home equity lines of credit, and more.

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

  • Missed the Tax Deadline? Read Our Complete Guide to CRA Penalties and Interest

    The 2018 personal tax filing deadline was April 30, 2018. Seeing as we’re now in August, if you missed it and you owe money, you’ve likely racked up Canada Revenue Agency (CRA) penalties and interest by now.

    Late-Filing Penalties and Interest

    According to the CRA, late-filing penalties and daily compound interest start accumulating on May 1, 2018 for any unpaid amounts owing for 2017. You could be charged:

    • 5%of your 2017 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.
    • 10% of your 2017 balance owing, plus 2% of your 2017 balance owing for each full month your return is late, up to a maximum of 20 months, if you’ve been charged a late-filing penalty on your return for 2014, 2015, or 2016.

    The above amounts are what you could be charged after filing your tax return late. However, if you decided to not file at all, the consequences could be even worse.

    Failure to Report Income Penalty

    If you fail to report an amount on your return for 2017, and you also failed to report for 2014, 2015, or 2016, you may have to pay a federal and provincial/territorial repeated failure to report income penalty.

    Any amount of income of $500 or more that was not reported is considered a failure to report income.

    These penalties are each equal to the lesser of:

    • 10% of the amount you failed to report on your return for 2017; and
    • 50% of the difference between the understated tax (and/or overstated credits) related to the amount you failed to report and the amount of tax withheld related to the amount you failed to report.

    False Statements, Omissions, and Gross Negligence

    If you make a false statement or omission on your 2017 tax filing, you could be charged an additional penalty:

    • $100; and
    • 50% of the understated tax and/or the overstated credits related to the false statement or omission.

    This penalty can be charged whether you knew about the false statement, or if it is caused by “gross negligence,” for instance if you paid somebody else to file your return for you (like an accountant) and they made an error. Even if you pay somebody else, you are still responsible for the accuracy of your return.

    CRA Collections

    If you fail to pay an amount owing on your tax return, the CRA can begin collection action. This can be financially devastating, and publicly embarrassing. Common collection action includes a wage garnishment, a frozen bank account or putting liens on your assets.

    The CRA can begin collections without warning and without a court order. Once a collection action is in place, it becomes even harder to negotiate with the CRA. If the CRA has started collection action, time is not on your side. The only two things that can force a CRA collection action to stop (besides paying the debt in full) are filing for a consumer proposal or filing for bankruptcy.

    What to Do

    If you’re reading this blog, it’s possible that you’re several months behind on filing your tax return, or you haven’t yet paid back the amount you do owe. If this is the case, you don’t want to delay it any longer — that will just result in even more charges, CRA collections, and potential court action for tax evasion. But you don’t have to go it alone.

    You need an expert that can look at your whole financial picture and put together a plan that will work for you.

    At DebtCare Canada, we can help with your tax debt, whether it’s personal income tax, HST, or payroll. We provide access to one of the only programs that can resolve a CRA back tax problem.

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

  • Preparing a Budget to Manage Back-to-School Shopping

    Back-to-school shopping in Canada can quickly get expensive. According to an Angus Reid poll of 1,500 people, in 2017 Canadians expected to spend $883 per family on back-to-school supplies and fashion — $325 more than they spent on holiday gifts last year.

    Over half of parents said that back-to-school shopping puts a strain on their household finances. Nearly 40% said it takes months for them to pay off the bill.

    If you’re already in debt, this could mean digging yourself into an even deeper hole. You need a plan to be prepared, especially with the current economic climate in Canada.

    As we’ve previously written, Canadian interest rates are on the rise. This means anything with a variable interest rate (like credit cards) will get more expensive with each Bank of Canada interest rate increase. So, if you rack up another $883 on your credit cards, the interest to pay it back could be potentially even higher if rates keep going up this fall.

    Don’t break the bank with back-to-school shopping — make a plan instead.

    1. Set a Budget

    How much can you reasonably afford to spend on back-to-school expenses without going into debt? Looking at your household budget can help you answer this. If you know what you typically spend in a month without back-to-school shopping, then you might be able to see where there is wiggle room for what you can spend.

    1. Choose Your Priorities

    As you’re reviewing your monthly household expenses, determine what is most important to you. For instance, if you have a monthly budget of $100 for entertainment costs, like new movies or a Netflix subscription, perhaps you forego those expenses this month to pay for back-to-school shopping. If you regularly order takeout, perhaps you decide to devote this month to cooking meals at home and use the savings for your school expenses.

    1. Determine What Back-to-School Supplies You Actually Need

    Your kids may not be big fans of this one, but it will really make a difference to your bottom line. What do they actually need for back-to-school? The school may have sent a list, or you can contact the administration and ask. For instance, they may be required to bring pencils, pens, and a scientific calculator, but they don’t need the latest iPad, the most expensive gel pens, or a brand-new lunch box every year.

    As for clothing, do they need new clothes because they’ve outgrown their old ones, or is new clothing just a nice-to-have? If it’s the latter, perhaps you agree to buy one or two new outfits but cap it at that. You could even put new clothing into your budget for the whole school year and use it as an incentive to keep grades up.

    1. Make Smart Shopping Choices

    Once you’ve determined what you actually need to buy, now you need to decide where to buy it. Some stores are going to cost more. If possible, avoid those shops. Plenty of great supplies can be found at less expensive options, like a dollar store, or , too. If you have friends with children a little older than yours, they may have clothes or school supplies their kids don’t need anymore.

    You can also get creative with your clothes shopping. Consider looking for a clothing swap (or organizing your own). This can be a lot of fun because it feels like going shopping without spending a lot of money.

    If your kids have supplies they’re no longer using, you could also sell those and use the proceeds for this year’s shopping.

    1. Look for Alternate Funding Sources

    If you absolutely must buy an expensive back-to-school item, like a laptop, and there’s no room in your budget, there may be assistance available. Ask about funding programs at your school or in the community.

    If you do need to go into debt to afford the back-to-school expenses, make it a smart debt. Don’t rack up credit card expenses that will take months to pay back, result in high-interest payments, and potentially harm your credit. Also avoid payday loans as they are dangerous cycles that are hard to get out of.

    Instead, look for a small personal loan with a reasonable interest rate that you can pay back in fixed monthly payments. This way you’ll know exactly what you have to pay every month and be able to budget for it accordingly.

    Back-to-school shopping can be expensive, but with some forethought it doesn’t have to break the bank. DebtCare Canada can help you make a budget or explore your options for loans or financial products that help you build credit.

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

  • BOC Interest Rate Rises to 1.5%: Do You Need to Consolidate Debt?

    Canadian interest rates are at a new high. On July 11, 2018, the Bank of Canada (BOC) interest rate rose to 1.5%.

    This is still a relatively low interest rate, but if you’re struggling with debt it could mean trouble.

    Canadian interest rates affect floating, or unsecured, debt. This could be anything from credit card bills to variable-rate mortgages to certain lines of credit. If you have debt with a fluctuating rate that changes month to month, the BOC interest rate will likely affect you.

    At the start of 2018, Canadian household debt levels were at a record high. But since interest rates have increased, those debt levels have dropped. With higher interest rates and stricter mortgage lending guidelines, people aren’t able to take out as much debt. Plus, wages are up, which is also helping.

    But even as the interest rate increases are working to bring down Canadian household debt, debt levels are still high. If you’re struggling to make ends meet, you might be wondering how to consolidate debt.

    Debt consolidation can take all of your unsecured, outstanding payments — credit cards, lines of credit, etc. — and put them into one lump sum.

    With debt consolidation, you could:

    • Take out a loan with a fixed interest rate (that won’t change with BOC increases).
    • Use that money to pay off your other high-interest debts.
    • You would still need to repay that loan, but you would be able to plan for it.

    Higher interest rates can also affect mortgage refinancing and renewals. For instance, if you got your current mortgage rate five years ago and it’s now up for renewal, your lender may tell you that you have to renew at a higher rate.

    And any new debt you take out with a big Canadian bank may be higher. The raise to 1.5% is expected to encourage big banks to raise their prime lending rate as well, so it will be more expensive to take on new debt.

    If you can’t repay your current debt, your credit score will be affected, which will also worsen your financial situation.

    In any of these cases, debt consolidation, mortgage renewal, or wanting to take out new debt but not having the means to pay it off, DebtCare Canada can help. We have always provided independent advice to our clients, considered all their options and we then recommend only what is in your best interest.

    We specialize in offering financial help to people with all types of credit and income. In addition we are now able to provide you with first mortgages, second mortgages, debt consolidation loans, and much, much more.

    This BOC interest rate increase is only the beginning. Interest rates will be increasing further in the future, so don’t wait to get a handle on your debt.

    Contact us today to get started. Call 1-888-890-0888 or visit www.debtcare.ca.