debtcare.ca

Category: Consolidate Debt

  • Facing Bankruptcy During COVID-19? There are Other Options too.

    If you are faced with tough financial decisions, bankruptcy can seem like the option that will reduce the burden of debt.

    As Bankruptcy Canada puts it, in simplest terms, in personal bankruptcy, you assign everything you own to a Licensed Insolvency Trustee in exchange for the elimination of your debts.

    While many individuals and companies file for bankruptcies, particularly during financial crises, bankruptcies come with their own challenges.

    To begin with, bankruptcy is expensive and can have personal implications if the debt carries director’s liability – such as unpaid source deductions and GST/HST liabilities.

    Also, when you file for bankruptcy, the trustee involved does not represent you. The trustee is an impartial court appointed officer, who has to look out for both your and your creditors’ interests. So, it is always recommended to work with a debt consultant, who can support you through the process.

    Lastly, bankruptcies are likely to cause your credit score to drop to the lowest possible rating at most Canadian credit bureaus.

    This is why it is important to evaluate other options available to you as well.

    Some of these options can not only help you retain your assets but also save your credit rating.

    Mortgage refinancing, for instance, is a popular way to get out of debt.

    When you’re looking to reduce your debt load, having equity can be incredibly beneficial. If you own a home, you can use available equity to consolidate your debts into one payment. This is an effective way to quickly deal with high-interest debt while managing your budget and minimizing the negative impact on your credit score.

    When you have to make one fixed payment on a fixed schedule, it is easier to keep track of what you owe.

    Additionally, given the all-time low interest rates, you could save money on your monthly mortgage payments if you bought your home at a time when interest rates were higher.

    If you do not have home equity, consumer proposals can be a viable option especially when you are facing collection action and have unsecured, non-mortgage debts between $8,000 to $250,000.

    It is a proposal made to your creditors, where your creditors agree to accept a single payment representing a percentage of your overall debt, that you repay monthly, normally over a term of 5 years.

    This helps in consolidating your debt, preventing collection action, and protecting your assets.

    While your credit score does take a hit after you file for a consumer proposal, this is usually temporary. Two years after your proposal is paid in full, your credit score can bounce back.

    Deciding what works for you depends on the level of debt you need to pay off, the worth of your assets, and your current financial standing.

    At DebtCare, we review all these aspects and propose a plan of action that helps you eliminate your debt on terms that are favourable for you. So, if you’re facing insolvency, contact us today for a free consultation on 1-888-890-0888 or visit www.debtcare.ca.

  • Debt Consolidation 101 – Dealing with CRA Collection Action

    Have you recently received a phone call or a letter from the CRA regarding your existing debt?

    That’s because, as of September 2020, the CRA has resumed its debt collection activities. The CRA has confirmed that it is reconnecting with taxpayers to re-evaluate their respective financial situations and discuss debt repayment options.

    The CRA has also started requesting voluntary repayment of CERB from individuals who have received it but did not meet the eligibility criteria.

    While no legal actions are being taken (at this point), it is good to know about what actions can the CRA take and what options do you have.

    What Happens if You’re Unable to Pay?

    If you have received a notice from the CRA and are unable to repay the debt, CRA is authorized to take certain actions that can have serious financial and/or legal consequences for you.

    As these are unprecedented times and many Canadians are facing financial distress, the CRA has temporarily stopped legal actions.

    For when legal actions do resume, the CRA normally will not take legal action until 90 days after mailing you the notice of assessment or reassessment.

    If you do not make timely payments or agree on a repayment arrangement, the following actions can be taken:

    I. Wage Garnishment

    Wage garnishment is done when tax debt goes unpaid. The CRA uses your federal income, GST/HST credits, and/or income tax refunds to obtain the payments.

    II. Asset Liens

    It is also possible for the CRA to obtain a writ or memorial to seize and sell the assets you own. These include your properties, your vehicles, and other assets.

    III. Third-Party Assessments

    In addition to garnishing wages and seizing assets, the CRA can hold a third party legally responsible to pay your tax debt. These include your spouse, business partner, or even a financial institution.

    Should You Look into Debt Consolidation?

    So, if you’re not able to make the payment and want to avoid further action from the CRA, is debt consolidation a good option?

    To answer this question, let’s define debt consolidation.

    Debt consolidation is when you obtain a new loan or sign-up for a program that helps ‘consolidate’ a number of smaller loans, debts, and/or bills into one, single monthly payment.

    There are a number of options you can look at depending on your situation. For instance, if you have equity in your home, you can obtain a second mortgage. This option offers low interest rates and preserves your credit.

    Obtaining a second mortgage, by leveraging your home equity, is a very practical solution that many homeowners in Canada opt for.

    Though, if a loan is not an option and you have multiple debt payments, you can look into a plan like a Consumer Proposal which can help you consolidate debt payments into one affordable monthly payment and ensure you are debt-free within 5 years.

    At DebtCare, we have created a debt repayment calculator that can help you quickly and easily estimate how you can be out of debt in five years or less!

    The Way Forward

    So, with so many debt consolidation options, which one is right for you? Financial consultants, like DebtCare Canada, can help you analyze all of your options, discuss various strategies for repayment, and bring together the resources you need to resolve your debt issues.

    Remember, when it comes to CRA debt, it is always good to have a proactive rather than a reactive approach.

    Contact us, for a free consultation, by calling us on 1-888-890-0888 or visiting www.debtcare.ca.

  • Credit Advice for the New Year: How to Get Out of Debt in 2021?

    Happy New Year!

    A new year is a new start. If you’ve faced some financial challenges last year, now is a good time to take some steps to rebuild your credit score and manage your debt.

    A series of small changes are all you need to bring your credit back on track! Here are some suggested actions you can take:

    1. Get an updated credit report to get a better understanding of your current financial standing.
    2. Create a budget for your expenses and ensure that you’re keeping a close track of your expenditures. This will help you trim down unnecessary spending and identify opportunities for savings.
    3. Always make more than the minimum monthly payments on your credit cards.
    4. In case you have multiple credit cards, try to keep your cards at only 50% of their credit limits or try to pay off and cancel some of these cards.
    5. Settle collection debts and send credit reporting agencies proof of any major developments like paying off a major account or a settlement to ensure that your report is up-to-date.
    6. Lastly, try to avoid taking on additional debt.

    The key to improving your credit score is keeping a close eye on your overall debt and ensuring that you’re paying down each creditor one by one.

    However, if your debt is unmanageable and you’re not able to make these payments, you don’t have to be stressed out. There are other alternatives that you can consider. For instance:

    • If you have equity in your home, you can leverage it to deal with your debt. As interest rates are quite low at the moment, it is worth considering refinancing options.
    • You can also look into a second mortgage. These mortgages are provided on the basis of equity and not your credit and income. So, if your credit is bruised or you are self-employed, this may be a good option for you.
    • Even if there isn’t enough equity to refinance, you can always rely on government-approved debt settlement programs, such as a consumer proposal. It is a proposal made to your creditors, where your creditors agree to accept a single payment representing a percentage of your overall debt, that you repay monthly, normally over a term of 5 years.

    No matter what your financial situation is, you can count on us for credit advice and debt consolidation solutions. Contact us today for a free consultation and start your journey to becoming debt-free! Call or text 1-888-890-0888 or visit www.debtcare.ca.

  • 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.

  • Debt Management Plan – Restructure Finances as You Prepare to Change Careers

    If you’re thinking of switching careers … you’re not alone.

    A survey commissioned by Amazon, and published on the CNN website, shares that 61% of job seekers surveyed are looking for a job in a new industry because of the pandemic.

    COVID-19 has given us an introspection opportunity. It has given us time to review our career choices and examine if there is something better out there.

    While some people are questioning if they were even on the right career path, to begin with, others are looking into continuing their education.

    What has changed?

    The way we work has changed too. For instance, work from home policies were previously being implemented by only a handful of companies. Now, companies are beginning to see that work from home can indeed be implemented even in a Post-COVID-19 world.

    HR professionals are championing it because it has improved work-life balance, many employees are happy that they don’t have to commute long distances, and companies are realizing that they may not need huge office spaces after all!

    Similarly, when it comes to industries, some are doing better than others. For instance, healthcare, essential retail, and information technology firms continue to hire despite a global pandemic.

    Though, many jobs in retail, hospitality, travel, manufacturing, and tourism have disappeared.

    Why is it important to restructure your finances?

    If you’re considering a career transition or perhaps even going back to school, it is important to have a financial plan in place.

    Following your dreams and taking a leap of faith can be difficult if you have debt and financial concerns bothering you.

    This is particularly true if you’ve lost your job and already have debt to pay off. If your bills keep accumulating and you’re not able to pay them off, this can impact your credit score.

    So, when opting to start a new career, reviewing and restructuring your finances and debt can help you gain peace of mind. Your debt management plan should include:

    • A detailed budget.
    • A plan to avoid taking on more unnecessary debt, such as charging expenses to your credit card.
    • Consolidating debt payments and paying off high-interest debt.

    You can also use our online debt repayment calculator, to easily calculate how you can be out of debt within five years!

    How can we help?

    Getting your finances in order can be challenging particularly when you have to focus on a career transition.

    This is where credit advice from a financial consultant can help.

    Working with a financial consultant, like DebtCare, can help you come up with a plan to reduce debt; enabling you to have a fresh financial start to match your new career trajectory.

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

  • Canadian Tax Consultants: Do You Have a Debt Relief Partner to Support Your Tax Clients Who are in Trouble?

    It is not uncommon to find out that your client is facing financial troubles – particularly during the time of a global pandemic.

    In fact, many independent professionals and tax specialists including personal tax accountants, tax preparers, bookkeepers, financial advisors, lawyers, and estate planners are amongst the first to learn that their client is facing financial turmoil.

    It can be a challenging situation when you are preparing a client’s books and your client reveals that they have a huge debt and no means to pay it off.

    Or, when your client is being audited and you know that the outcome will not be favourable.

    Where the CRA collections team is involved, the situation can get trickier. The CRA is relentless and when your client tries to manage their problem on their own – it can make matters worse.

    For instance, the CRA will look for financial disclosure that may lead your client to disclose where they work as well as their bank and asset details. Perhaps the CRA accepts a temporary arrangement – but the moment it is up, they can move forward with wage garnishments, freezing of bank accounts, and liens on the property.

    Today, an average Canadian owes $1.58 per dollar of disposable income.

    This debt is likely to increase when mortgage deferrals end, the government’s relief measures are withdrawn, and the CRA’s collection action resumes.

    This is the calm before a massive storm – would you agree?

    This is why it is great to have a partner in your corner who can independently represent your client and work with them to resolve their financial challenges.

    By providing your clients access to debt consolidation programs and opportunities for debt reduction, you are not only helping them navigate their financial challenges but are also strengthening your long-term relationships.

    This same level of service may not be received if you send your client to a trustee, this is because they offer insolvency as their service and your client will be counselled on that basis.

    Similarly, if you send your client to a bad credit lender who only offers high-interest products or a mortgage broker who only arranges mortgages, your client will only receive advice in those specific areas.

    At DebtCare, we provide access to many financial options and debt consolidation programs. We take on a consultatory role where the client pays for our consultation and after working with their financial profile, we guide them down the best path.

    This includes aligning all professionals that will be needed. Whether it is securing financing from a lender or working with a trustee to facilitate a consumer proposal, we can help.

    To learn more about our services for Canadian tax consultants, call or text us on 1-888-890-0888 or visit www.debtcare.ca.

     

  • Canada Emergency Response Benefit (CERB) and the CRA Tax Implications – Here’s What You Need to Know

    There is no denying that the Canada Emergency Response Benefit (CERB) helped many Canadians – over 8.5 million individuals to be specific.

    To get the money into the hands of the Canadians who needed it, the government processed applications as swiftly as possible. To do this in record time, the government relied very heavily on an honour system.

    This is why the benefit was handed out without further verifications at that time.

    CERB ends – what next?

    As of last week, CERB has officially ended. Though, individuals can still retroactively apply for CERB payments for any period before October 3 by December 3.

    As the CERB recipients are now being transferred to an updated employment insurance (EI) system, we take a look at CERB and its associated CRA tax implications.

    You will have to pay taxes on CERB as it is considered as income for this year. Here are a few things that can help you be more prepared for the next tax season.

    Did you qualify for CERB?

    As CERB was so new, many people weren’t sure if they qualified.

    Some people even received it twice as they applied through both Service Canada and the CRA for the same eligibility period.

    Here’s the eligibility criteria to help you ascertain if you were eligible:

    • You did not leave your job voluntarily.
    • You are over 15 years of age.
    • You earned a minimum of $5,000 (before taxes) in the last 12 months or in 2019.
    • You stopped working due to COVID-19, your work hours were reduced because of COVID-19, or you were unable to work as you were taking care of someone.

    In addition to being able to meet the criteria shared above, you also need to ensure that you only received one payment per eligibility period.

    Will the CRA impose penalties?

    Many people applied for CERB because they were dealing with financial problems that made it hard to make ends meet. Some of these individuals may not have been eligible.

    If you feel that you were not eligible or your eligibility changed over the period, it is prudent to seek tax advice and have financial strategies in place to deal with any action from the CRA.

    As the benefit was distributed without prior checks, the CRA will assess cases when taxes are filed.

    This is because, as CBC highlights, even a fraud rate of 1% could cost the federal government billions of dollars.

    So, if you are reassessed you will not only have to pay back the money but also penalties and interest retroactively. If you already have accumulated debt, you may be looking at potential new debt in the coming tax season.

    Tax debt and CRA collections are areas where we can help!

    We offer a free consultation to explore what options are available to you.

    As a debt and tax consultant, we can also look at your situation and give you an idea of whether you qualified for CERB, what the potential tax amount could look like, and what you can do to prevent collection action.

    Contact us, for tax advice, by calling us on 1-888-890-0888 or visiting www.debtcare.ca.

  • FAQ: I want to refinance but COVID-19 has ruined my credit?

    With the pandemic causing business closures and layoffs across the country, many individuals feel that their credit score has taken a hit.

    Where to start?

    While the situation might seem gloomy at the moment, your credit may not be as bad you think it is. The first step towards creating a practical plan of action is getting an updated credit report through Equifax or TransUnion.

    If you have equity in your home, it is also recommended to do a quick analysis of your home’s current worth and how much you own in the mortgages.

    Where do you stand in terms of credit?

    When you have your credit report in your hand, you will see that every credit account, for an individual, is assigned a value between R1 to R9. R stands for revolving credit and the numbers 1-9 are account classifications, based on the notes provided by your creditors.

    If you are between R2-R5, your credit score can recover to an R1 position if you are able to make your payments. Though, if there have been habitual late payments or an R9 rating, your credit is damaged for the next 6 years.

    Where does home equity fit in?

    So, your home equity is the value of your home minus the total outstanding debt registered against the title of the property. Lenders use a calculation called Loan-to-Value ratio and lend on the basis of the equity available in your home.

    Hence, it’s really not about bad credit anymore. The value of your equity determines the options you have when it comes to creating a financial plan to repay your overall debt.

    Many banks and institutional lenders that lend to the public will want you to have decent credit and provable income. Decent credit means a 680+ beacon score. Some of these lenders may lend on slightly lesser scores if you have more equity. You can expect to receive a loan of up to 80% of the home value, less the mortgage balance.

    Trust companies, mortgage investment corporations, credit unions, and private lenders will often lend to people who have bad credit or have difficulty proving income because they mainly lend on the basis of equity. You can expect to receive a loan of up to 65%-75% of the home value, less the mortgage balance. Additionally, these lenders typically lend through mortgage brokers.

    What if I owe more?

    If you owe more than 80% of the value of your property (or close to it), refinancing your mortgage may not be an option for you – but that doesn’t mean its game over in terms of dealing with your debt!

    If you are in a financial crisis and you can’t see a path where a lender will loan you the money to pay off your debt – you can look at other options. There are many federally mandated solutions that protect people in debt and prevent creditors from taking action against them.

    A consumer proposal is an excellent example. In a consumer proposal, an arrangement is made with your creditors where they accept often much less than what you owe, over a period of 5 years. The proposal can help you keep your home, freeze the interest, cease collection action, and enable you to make a single monthly payment that you can live with.

    If you are a homeowner struggling with debt, the best thing that you can do is work with a professional who can assess all the options.

    This can’t happen at a bank or a similar financial institution because they strictly adhere to their predefined lending criteria. A debt consulting company, that also arranges financing, is the best way to go because they are able to present all of your options and help you choose the one that will help you deal with the present crisis while considering your future plans.

    At Debt Care, we work with all types of lenders who will lend under all types of circumstances.

    Contact us today for a free consultation on proposals, bankruptcies, and mortgage refinancing. Call 1-888-890-0888 or visit www.debtcare.ca

  • Homeowners: How to Cut $25,000 of Debt Down to a Minimum Payment of $320.00 Per Month?

    With the COVID-19 pandemic affecting the overall income of most households, it is wise to re-evaluate your financial plans to ensure that you’re able to pay your debt and retain your assets. This is particularly useful if you’re anticipating additional expenditure or a decline in your monthly income.

    If you are looking for ways to reduce your overall debt or restructure your monthly payments, you can look into a home equity loan.

    Obtaining a second mortgage, by leveraging your home equity, is a very practical solution that many homeowners in Canada opt for.

    What is a second mortgage?

    As the name suggests, a second mortgage is an additional loan taken on a property that is already mortgaged. It is secured on the basis of your home equity.

    • Second mortgage is behind your first mortgage, so if you like your first mortgage rate or are currently locked into the first mortgage – a second mortgage enables you to unlock equity without any disruption to your first mortgage.
    • A second mortgage opens you up to more lenders – because second mortgages are smaller, there are more lenders offering them including private lenders.
    • Second mortgage lenders often lend based on equity and not your credit and income. So, if your credit is bruised or you are self-employed, you can still get the help you need.

    How much equity is needed to get a second mortgage?

    Lenders use a calculation called Loan to Value (LTV) ratio when deciding how much of your equity they will loan you. Generally:

    • If you have a strong income and decent credit you can borrow up to 80% of your home equity.
    • If you have poor credit, limited time on the job, or income that can’t be proved – then you can borrow up to 65%-75% of your home equity.

    While banks offer second mortgages – it is always best to go through a mortgage broker for this type of financing. This is because many lenders who offer second mortgages don’t lend to the public directly and only work through brokers. Some of the advantages of working with a broker include:

    • A broker is able to look at your financial profile and know immediately which lenders will work with you. This makes the approval process faster.
    • A broker has an in-depth understanding of the mortgage closing process where secondary financing is concerned and will be able to expedite your closing more efficiently.
    • Brokers who offer finance and debt consulting will be able to offer other financial solutions if, for some reason, you can’t get the mortgage.

    So, is a second mortgage right for you?

    At DebtCare Canada, we can help you evaluate your options and explore a variety of different solutions. There are a number of ways to deal with debt and it is vital to create a well-thought-out plan to eliminate your debt for good.

    Special situations, like the current pandemic, call for special resources. We have access to private mortgage lenders that don’t lend directly to the public and only work through brokers. Contact us today to discuss your options – including second mortgages, home equity loans, HELOCs, and more.

    Contact us today for a free consultation. Call or text 1-888-890-0888 or visit 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/.