debtcare.ca

Category: Canadian Economy

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

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

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

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

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

    Winter also adds another layer of complexity to your operations.

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

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

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

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

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

    Should you just opt for bankruptcy?

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

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

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

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

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

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

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

  • What To Do If You Can’t Pay Your Rent or Mortgage

    With the development of the novel coronavirus (COVID-19) pandemic, many Canadians are struggling to pay their bills — including rent or mortgage payments.

    An Angus-Reid survey showed that 1 in 3 Canadians worry they’ll miss a rent or mortgage payment due to COVID-19.

    A survey from the Canadian Federation of Small Businesses found that 23% of 9,000 respondents couldn’t pay their rent or mortgage on April 1.

    While some banks and lenders are offering mortgage deferrals, this is on a case-by-case basis and isn’t always a perfect solution. The Toronto Star reported that interest may continue to be charged. One Canadian told the Star that he could defer his mortgage payments for six months but would end up owing thousands of dollars more in interest over the course of his loan.

    Tenants don’t necessarily have even this assistance available. While there is some emergency financial relief coming from the federal and provincial governments in Canada, it may not be enough to pay rent in full, especially for those who live in more expensive cities.

    What can you do if you’re in this position? There isn’t an easy answer, but there are some options that could potentially help.

    For Mortgage Holders

    For those who own their own home, there are several options to consider.

    Talk to your lender

    First, if you haven’t done so already, you can speak to your mortgage lender about options for relief during this time. While not all assistance is beneficial in the long-term — as the Toronto Star reported — it’s possible your lender will be able to offer a better option.

    If you are in a pinch and the only option is to take a deferral in the short-run with more interest in the long-term, it may make sense for you to take this offer and make a plan for the additional interest payments. Since you know that it will be coming, you can set aside funds for the payments once you are back on solid financial footing.

    However, there are other options you can consider as well.

    Refinancing your mortgage

    With lowered Canadian interest rates, it could be possible for mortgage holders to refinance their mortgages at a lower rate or at a variable-rate (vs. a fixed-rate mortgage where your payments always stay the same). If you have the equity available, you could refinance for a lower rate and use the difference to cover your payments in the interim.

    You could also be eligible for a home equity line of credit, which could free up some funds in the short-term.

    Learn more about mortgage refinancing: https://debtcare.ca/pros-cons-refinancing-your-mortgage-renewal/

    Dealing with debt and other financial obligations 

    Another option is to look beyond your mortgage and rent to your other payments. What else are you obligated to pay?

    For instance, many Canadians carry a large amount of high-interest credit card debt. Trying to make credit card payments and your mortgage payments with a drop in income could be even more difficult.

    Take a look at your other expenses and ask what can be done to lower your overall debt. Can you cancel subscriptions or find savings in other parts of your budget? Other lenders are offering relief during this time, too. Even if you can’t get a break on your mortgage, you may be able to settle other debts to make up the difference.

    You can also consider other measures, such as debt consolidation or even filing for insolvency – bankruptcy or consumer proposal. While it is not always possible to keep your home when you do this, that isn’t always the case. Talk to a debt counsellor who can help you figure out what risk there is to your current residence.

    For Renters

    Renters don’t have quite the same options as mortgage holders, as they are typically negotiating with a landlord versus a lender. While many across the country are calling for a rent freeze, nothing has been announced yet. However, there are still opportunities that keep you protected.

    Talk to your landlord

    If you haven’t already done so, talk to your landlord about options for deferring or pausing rent payments. While you can’t negotiate the mortgage payments, they may be able to (see options above).

    Even if they are reluctant, some landlords in Canada have accepted half the rent payment instead of the rent in full.

    If your landlord is not open to negotiation, you will need to look to other assistance.

    Look into provincial rent assistance

    While not every province has announced rent relief for tenants, some have released measures.

    According to CTV News, the B.C. government is providing up to $500 as a rent rebate to those who have experienced a significant drop in their income due to the outbreak.

    In Ontario, New Brunswick, and Nova Scotia, landlords are not allowed to evict tenants. However, this doesn’t necessarily mean they can’t hand out eviction notices, as reported by Toronto.com. In Ontario, for example, landlords can still give out eviction notices, but Landlord Tenant Board (LTB) — the body that enforces eviction orders — hearings are on hold for the time being.

    Prince Edward Island also announced a temporary rental assistance benefit of $1,000 per household for a three month period. Eligible candidates will receive $500 in the first month and $250 the following two months.

    Deal with debt

    Similar to mortgage holders, look beyond your rent payments to see where you can cut costs in other areas.

    If you are making payments to an unsecured line of credit, for instance, perhaps that debt could be settled and the funds freed up for rent payments. If you can negotiate other payments — such as your car insurance — you can put all possible resources towards making your rent payments in the meantime.

    If your income has been reduced, it can actually be better for debt settlements as they are often based on income — so you may be able to get a better deal now than when your income returns.

    Speak to a debt counsellor to explore your options in full. A qualified counsellor can help pick the best option for you.

    In Conclusion

    This is a difficult, unprecedented situation and there aren’t any easy answers.

    However, it can be made easier with assistance. At DebtCare Canada, we have helped thousands of Canadians reduce and restructure their debt, access financial help, and more.

    We are open fully remotely during the COVID-19 pandemic. If you’re struggling with mortgage or rent payments or other bills, please get in touch so we can help you find a way through.

    Call: 1-888-890-0888
    Text: “Help” to 1-888-890-0888
    Fill out an online contact form or learn more: www.debtcare.ca.

  • Get Debt Help Without Leaving the House – Here’s How

    In the past, before the novel coronavirus (COVID-19) people might have gone to see a financial consultant in person for debt help or otherwise, but with social distancing in effect, that is not advised right now unless absolutely essential.

    However, debt help is more necessary than ever right now. The impact of COVID-19 has left many Canadians out of work and struggling to pay bills.

    A report from the Canadian Centre for Policy Alternatives warns the unemployment rate could rise to 13.5%, the highest level since the Second World War.

    In one week, more than 500,000 Canadians applied for employment insurance (EI). The government is also expecting more than 4 million applicants for the recently announced Canada Emergency Response Benefit (CERB).

    While some government help is available — such as emergency caregiver assistance and a wage subsidy for eligible employers — these programs are still rolling out and there may be a waiting period to receive funds. And for many, the assistance provided may not be enough to get by.

    Dealing with Debt to Free Up Finances

    Debt payments take up a large chunk of Canadian budgets. According to Equifax Canada, the average Canadian carries $72,950 in debt. $23,800 of that is non-mortgage debt (which includes credit cards, loans and lines of credit).

    Even carrying a little bit of debt can stretch your budget, especially when your income is reduced. Do you want to be putting your limited income towards credit card payments?

    When every penny counts, it’s better to make that money work for you — instead of using it to repay past expenses.

    The time to deal with debt is now, particularly if you have been laid off or your income has been affected by COVID-19 or otherwise.

    While everyone is frightened and worried (and rightfully so), the current situation and loss of income will allow people to get much lower deals on their debts as their income has been reduced. Most creditors will be accepting any reasonable offer.

    If you wait until your income has returned, the opportunity to have your debt reduced to the same extent will be gone.

    How to Get Debt Help Online

    The key to getting debt help online — without leaving your house — is knowing what you are looking for.

    You want to find:

    • A debt consultant that has an established reputation (meaning you can trust their services — this is especially important when you cannot visit their offices due to social distancing).
    • A debt consultant that works in your part of the country or nationally.
    • A debt consultant set up for remote access — with social distancing, you shouldn’t have to go into an office.
    • A debt consultant that will review all your options.

    We can only speak to our services at DebtCare Canada, but we provide exactly that. We’ve helped thousands of Canadians deal with their debt and get their finances back on track.

    We act solely in your interest to ensure that you get the best possible results by utilizing federal government programs and other financial solutions to help you deal with your debt with dignity.

    Our reputation is trusted and secure. We operate nationally and remain fully functional during the COVID-19 pandemic through remote operations.

    How to Contact DebtCare Canada Remotely:

    We know this is a stressful time and we want to assure you that DebtCare is here for you. If you are struggling, please reach out. 

    You can also follow us for regular information related to dealing with your finances during COVID-19 and beyond. DebtCare is on Twitter, Facebook, and LinkedIn.

    Learn more about our services at https://debtcare.ca/.

  • COVID-19 Income and Debt Help for Canadians

    The past two weeks have been a non-stop train of breaking news as Canada copes with the novel coronavirus, COVID-19.

    This public health pandemic is affecting many across the country — both medically and financially.

    In order to “flatten the curve” and reduce the risk of infection, many businesses and public services have been suspended, including in some provinces:

    • Public and private school closures.
    • Daycare closures.
    • Eat-in restaurant closures (take-out and delivery are still available).
    • Temporary closure of non-essential businesses, such as clothing retailers.
    • Temporary closure of public event spaces, such as movie theatres.
    • The list goes on…

    While all of these measures are meant to reduce COVID-19 risk and pressure on our healthcare systems, it has created another challenge: financial difficulties.

    Many Canadians are now out of work, or unable to work due to the need for childcare or caring for those who are ill. While some are working from home, not everyone has that opportunity.

    Businesses are also feeling the loss of income, and some have had to lay off employees temporarily.

    While public safety is essential, there is no denying the challenge this has had on the Canadian economy — and that’s where emergency relief comes in.

    Emergency Response Package

    On March 18, 2020, Prime Minister Justin Trudeau announced an economic aid package of $82 billion. This includes:

    • A temporary boost to Canada Child Benefit payments.
    • A new Emergency Care Benefit of up to $900 biweekly, up to 15 weeks, to provide income support to workers who have to stay home and don’t qualify for paid sick leave or employment insurance (EI). This includes those who are self-employed.
    • A new Emergency Support Benefit to provide up to $5 billion in support to workers who are not eligible for EI and who are facing unemployment.
    • A six-month, interest-free reprieve on student loan payments.
    • The income tax deadline has been extended to June 1, 2020 and taxpayers can defer tax payments until August 31.
    • And more.

    Mortgage Payments Deferrals

    The Big 6 Banks announced on March 17 and 18 that they are taking measures to support customers on a case-by-case basis to provide solutions, including up to a six-month payment deferral for mortgages and the opportunity for relief on other credit products.

    This is meant to help those who are facing challenges due to COVID-19, such as pay disruption, childcare disruption, or illness.

    Customers are encouraged to reach out to their lenders to ask what assistance there is for them.

    Bank of Canada Interest Rate

    On March 13, 2020, the Bank of Canada announced an emergency interest rate cut to 0.75% — the lowest that it has been since 2017.

    “It is clear that the spread of the coronavirus is having serious consequences for Canadian families, and for Canada’s economy,” the Bank said.

    The next Canadian interest rate announcement is scheduled for April 15, 2020. Economists are predicting the interest rate will be cut again.

    The lower interest rate means that credit is easier to secure — and is especially helpful for variable-rate debts, such as variable-rate mortgages, credit cards, or unsecured lines of credit.

    Putting It All Together — and Dealing with Debt

    Let’s talk for a moment about the impact of all of this. While these are good measures temporarily, we must acknowledge that they are not necessarily long-term solutions.

    For people relying on a certain amount of income to meet their bills, $900 biweekly is likely not enough to cover their expenses.

    And then there is the matter of deferrals — whether that be deferring mortgage payments, student loans, income tax payment, or otherwise.

    These payments will still need to be made eventually. Some of the details have yet to be confirmed, but consumers need to be aware that these payments are not just disappearing. These methods are meant to give you time to get the money together, when hopefully the economy is recovered, along with public health.

    But (and there is a big but) the money will still be owed. You will still need to find the funds.

    If you are currently earning less than you usually make due to COVID-19, or have a hard time meeting your bills regardless, other measures may need to be taken to get your finances on track.

    These might include:

    • Creating a budget and tracking expenses.
    • Avoiding taking on more unnecessary debt, such as charging expenses to your credit card.
    • Consolidating debt payments and paying off high-interest debt.
    • Filing for insolvencies, such as bankruptcy or consumer proposal.

    Take the time now to make a plan for your finances during the COVID-19 pandemic. If you are on the brink, contact a debt counsellor today.

    Debt can weigh down your lifestyle, particularly when money is tight. If you have $10,000 in credit card debt, those payments can take away from your ability to pay the mortgage or rent, buy groceries, or pay utility bills. When every dollar counts, you don’t want any more than necessary going towards your debt payment.

    At DebtCare Canada, we remain available by phone, text, or online across the country. We will talk through your financial options with you and help you find the best path forward for your unique situation during the COVID-19 pandemic or otherwise.

    Contact us for a free consultation. Call or text “Help” to 1-888-890-0888 or visit www.debtcare.ca.

  • What You Should Know to Be Financially Prepared for 2019

    Make a Personal Finance Plan for Higher Interest Rates, Mortgages, Line of Credit Payments, and More

    The new year is upon us. Do you have a personal finance plan for 2019?

    The Canadian economy is changing. We have already seen the effects of this in 2018. Canadian consumer debt is staying at high levels — Canadians owe more than $2.13 Trillion in debt —and interest rates are continuing to rise.

    The same tactics that used to work for managing your finances may not cut it for 2019.

    When interest rates were at all-time lows, if you wanted to renovate your house, it might have made sense to take out a purchase line of credit (PLOC). But rising interest rates mean both higher mortgages and line of credit payments, so this may not be a practical choice any longer.

    The housing market may continue to cool, so home value could decline — meaning it is possible that you will not be able to access as much home equity.

    Plus, if you are using lines of credit with variable interest rates, you may find yourself paying more over the long run, especially if you are already carrying other debts.

    Going into 2019, you should have a plan for your debt — a personal finance plan.

    First, ask yourself these questions:

    1. What debts am I currently carrying?
    2. Are there any that will fluctuate with interest rates (credit card debt, lines of credit, unsecured loans, etc.)?
    3. If so, is there a way that I can consolidate debt now before interest rates increase again?

    Then consider your home equity.

    And, finally, look at what is on the horizon for 2019 (and beyond):

    • What financial projects am I hoping to complete in 2019?
    • What big savings goals are coming up in the next five years? Ten years? (Retirement, kids going away to school, relocating, etc.)
    • How much will I need for those goals and what is the best way to finance them?

    When you know the answers to these questions, you can make a budget for the year ahead and stay on the right financial track.

    There have been several interest rate increases already, and economists are predicting even more in 2019. Waiting and seeing could prove dangerous if you are carrying a lot of debt.

    Even if you are not carrying a lot of debt, it may be in your best interest to think about big expenditures now rather than later. The new year is the perfect time to sit down and plan for the future. Be sure that your planning includes your personal finances!

    DebtCare Canada can help you make a personal finance plan that considers your entire financial position.

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

  • Are You Ready for Canadian Mortgage Interest Rates to Go Up?

    Currently, Canadian mortgage interest rates are at record lows. This has been great for those looking to obtain mortgage financing over the last few years, whether first or second mortgages. However, as the saying goes, nothing lasts forever.

    Back in March, CTV News reported that experts are warning of a rise thanks to U.S. bond prices. According to the article, “Fixed rate mortgages, the most common in Canada, are tied to long-term Canadian bond prices, which are in turn tied to U.S. bond prices. Banks sell bonds to raise money to lend to mortgage holders and other borrowers. When the U.S. Federal Reserve raises rates, bond prices typically fall. As bond prices fall, banks tighten their lending, and mortgage rates rise.” This could mean hikes for Canadians looking to refinance their current mortgages.

    Read more on this here: http://www.ctvnews.ca/business/mortgage-expert-warns-u-s-fed-will-cause-rate-increases-in-canada-1.3322093.

    If mortgage rates rise, many Canadians could be in trouble, especially those with high levels of debt. For example, if five-year fixed rates were to rise from 2.5% to 3% on a $300,000 mortgage, that would result in an almost $80 increase to each monthly payment. An increase to 3.5% would represent almost $150 more per month. Can you afford an increase of $80 a month? What about $150?

    Using your mortgage to get your debt in order is a great way to prepare yourself should Canadian mortgage interest rates rise. Doing so can help get rid of the various monthly payments, leaving you with one monthly mortgage payment. This will greatly reduce interest and should help you better manage on a monthly basis. But you have to act quickly.

    Start by finding out what your home is actually worth and verifying how much equity you have to play with. These two numbers will help you determine the refinancing option best suited to your situation, be it a first mortgage, a personal line of credit, or a second mortgage.

    Even if you have bad credit, having enough equity could put you in a much better financial position, helping to restore your credit and getting rid of some of that stress caused by the debt.

    Using your home to refinance and consolidate debt is a great financial option, but you need to strike while the iron is hot. It is best to lock in at the current low rates before things get more expensive.

    DebtCare offers a free, fully-customized, property valuation report and mortgage refinancing advice to help you make the most prudent financial decision.

    Get in touch today by calling 1 (888) 890-0888.

     

     

  • In the News: Canadian Economy Headed for Trouble – What Can the Average Family Do?

    debtcare1We’ve been hearing murmurings for months now about the state of Canada’s economy – according to economists, we are headed for trouble, and that could mean heaps of financial trouble for the average Canadian household – particularly those struggling with debt.

    According to a recent CBC News article, “Canada’s Economy ‘Dead in the Water,’ Headed Toward Recession,” those murmurings are actually more than just murmurings: http://www.cbc.ca/news/canada/manitoba/canada-s-economy-dead-in-the-water-headed-toward-recession-1.3099645.

    Is Canada headed for a recession? The article states: “Recessions are defined as two consecutive quarters of negative growth. Recently, we learned from Statistics Canada that Canada’s economy shrank between January and March, the biggest decline in GDP since 2009, and the first contraction in the last four years. In fact, the economy contracted in all three months.” So, in a word, yes. It looks as though Canada’s financial future is a bit murky to say the least.

    This prospect is a result of a number of factors: private sector investment has declined dramatically as a result of the oil crisis. Consumers are also cutting their spending dramatically (lowest level since 2009) and governments are decreasing spending as well. The Bank of Canada has dropped interest rates twice this year so far, and this is bound to make an impact too, although for better or for worse has yet to be determined.

    So what can the average family do to combat this challenge? If a recession is in fact in Canada’s future, the best thing to do right now is get finances in order, pay off debts, deal with bad debts, and start saving if possible.

    For many Canadians, this may seem easier said than done – after all, the average Canadian household is sitting at just under $100,000 in debt, according to another recent CBC Newsarticle. However, taking a few simple, yet significant steps, can help you reduce your overall debt, deal with collection action, and help you better manage financially.

    Want to know more about how to get your finances back on track before a recession hits? DebtCare Canada can help. Call us today at 1-888-890-0888.