debtcare.ca

Category: Deal with Debt

  • Affordable Housing in Toronto is Still a Major Problem

    Affordable housing in Toronto has been difficult to find for a while now — but despite hopes that it would get better, it is still a major problem for many.

    A recent report from Zoocasa determined that in the Greater Toronto Area, it would take 32 years for a household earning a median income to save a down payment for a typically-priced home.

    And for those renting instead of buying, affordable housing isn’t much better.

    The Canadian Rental Housing Index recently determined that in 20 Canadian ridings — including some in the Greater Toronto Area such as Willowdale, Thornhill, Richmond Hill, Markham-Unionville, University-Rosedale, and more — at least 25% of renters are spending 50% or more of their income on rent alone.

    At least 48% of renters are spending 30% or more of their income on rent.

    “Housing is typically considered affordable if a household spends less than 30% of its before-tax income on rent plus utilities,” the Index stated.

    See more of the Index results here: http://rentalhousingindex.ca/en/#intro

    With increases to home prices and rental rates, it’s no wonder that it’s getting harder and harder to make ends meet. It’s too expensive to live in the Greater Toronto Area and other major cities, and lenders know it.

    If you are in this situation, what can you do?

    While this is a tough situation to be in, the first thing to do is try to free up room in your budget. If you are using credit to balance the shortfall, you may find that doing away with the debt frees up the cashflow you need to pay rent or save more for a down payment.

    Debt can harm your budget in two ways:

    First, it can get in the way of your cashflow. If you are always making debt payments (like paying off your credit card balance plus interest) you’re spending money you could use elsewhere.

    Second, many lenders use your total debt service ratio (TDS) to determine how much you can afford to borrow — particularly when it comes to a mortgage. In addition, carrying too much debt can hurt your credit score, which makes it harder to be approved for low-interest loans. If you are hoping to get a mortgage in the near future, or renew an existing one, lowering your total debt-to-income ratio will only help.

    While getting out of debt won’t make Toronto’s home and rent prices drop, it can make it easier for you to balance your budget and save money at the same time.

    DebtCare Canada helps Canadians deal with outstanding debt. We’ve helped thousands of people reduce or restructure their debt, repair and rebuild credit, access financial help, and more.

    Contact us today for a free assessment to see how we can help you manage your budget while dealing with the lack of affordable housing in Toronto and the GTA.

    Call 1-888-890-0888 or visit www.debtcare.ca.

  • Protecting Your Home Through Financial Restructuring

    Having financial troubles can be stressful no matter where you are in life – but it’s doubly so if you own a house.

    There’s a common fear that financial restructuring will mean losing your home. Fortunately, there are ways to protect against this.

    The first thing to do is to make sure that you stay up-to-date with your mortgage payments. If you haven’t defaulted on your mortgage, your chances of keeping your home through a financial crisis increase greatly.

    Let’s look at some of the financial restructuring options you might have when you own your home…

    1. Debt Consolidation

    As long as your mortgage payments are up to date, a debt consolidation loan can be a good way to deal with outstanding unsecured debt.

    Unsecured debt might be credit card bills, lines of credit, your cell phone bill, etc. It is anything not tied to collateral – so your mortgage and car loan would not fall under this umbrella.

    Unsecured debt usually has a high interest rate, making your monthly payments even more expensive. This is where a consolidation loan can help. You can use the money to pay off your unsecured debts, and then pay back the consolidation loan at a fixed interest rate over a manageable schedule.

    You won’t be paying as much in interest, so you can use the extra money to keep your mortgage payments up to date.

    1. Home Equity

    Sometimes your home can actually be a source of income for financial restructuring. If you have equity available, you might be able to use it to pay off your outstanding debts – essentially, this is a form of a consolidation loan.

    Again, this is dependent on your mortgage payments being current and made on time every month.

    1. Filing for a Consumer Proposal

    If you don’t have enough equity available or aren’t eligible for a consolidation loan, filing for a consumer proposal is another option.

    Consumer proposals deal with unsecured debt up to $250,000 (excluding your mortgage). In a consumer proposal, you make an offer to your creditors to settle your debts for less than what you owe. This offer must be accepted by the majority of your creditors and you must be able to prove they’ll get more money than they otherwise would if you filed for bankruptcy.

    In most cases, you can keep your home when you file for a consumer proposal, as your assets remain untouched. Again, this depends on your mortgage payments being kept up to date and is based on you having enough income to continue paying your mortgage after the proposal.

    A good financial advisor will structure your consumer proposal based on equity.

    If you have more than $250,000 in unsecured debt, you might file for another kind of proposal or bankruptcy instead.

    1. Filing for Bankruptcy

    Filing for bankruptcy is where most people fear they will lose their home. This is because in a bankruptcy, assets are often sold to pay off debts – including in some cases your house.

    However, this doesn’t always happen – and you may able to keep your home depending on the amount of equity you have available.

    If:

    • You don’t have much equity (this varies depending on province), and
    • Your mortgage payments are up to date

    your ability to keep your home increases substantially.

    If you do have a lot of equity, you may still be able to keep your home by repaying your equity through borrowing money, or through a second mortgage.

    A good financial advisor, like those at DebtCare Canada, will also help you structure your bankruptcy based on equity.

    1. If You Can’t Afford Your Mortgage…

    As we’ve discussed, keeping your home through financial restructuring largely depends on being able to continue making your mortgage payments.

    If your mortgage is up-to-date, you’re less likely to lose your house. But what if even after consolidating debt and making a budget you don’t have enough income to make your mortgage payments?

    This can be a whole other issue – but it’s important to remember that you still have options. You might need to:

    • Make more income through asking for a raise or getting a second job.
    • Or sell your home and downsize to a smaller mortgage.

    While selling your home may not necessarily be the same thing as keeping it, it can be preferable to losing your home through having it seized. In this option, you would still retain the profits from the sale, and you could use the money to move into another, less expensive property.

    A good financial advisor, like the ones at DebtCare Canada, can help you sort through your financial restructuring options, so your home is protected.

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

  • True or False: Your Canadian Trustee in Bankruptcy Represents YOUR Creditors in a Consumer Proposal?

    debt2Bankruptcy is often perceived as scary – a last resort option for those that are in dire financial straits. The truth, however, is far less terrifying. Average Canadians are turning to bankruptcy as a viable debt relief solution far more often, and for good reason: it can stop collection action and stop penalties and interest. The scary part though is not knowing who to turn to, and thinking that a Canadian trustee in bankruptcy is your only option.

    A Canadian trustee in bankruptcy is appointed by the Superintendent of Bankruptcy and is regulated by the government. They are a court officer and appear in court. They administer the Bankruptcy Act.

    However, when it comes to representation, they are not like a lawyer or accountant who represents you. A trustee represents your estate, so essentially, your money – but once you file for bankruptcy, that money is no longer yours, it becomes the estate itself.

    During the bankruptcy process, a trustee will attempt to administer the estate, acting for both you and your creditors. That being said, they have as much of an obligation to make a fair deal for your creditors as they do for you.

    Some additional catches:

    • In the case of consumer proposals, the more a trustee negotiates for your creditors, the more they earn – so it is in their best interests to negotiate a higher amount.
    • There is no confidentiality – if you tell them something that relates to your filing, it is the same as telling your creditors and could result in financial consequences.
    • If you earn more money or come into money – they will be the first ones to have their hands on it to the benefit of your creditors.

    Again, consumer proposals and bankruptcies may seem scary – we may not seem to be helping so far, but in reality they are great solutions – dealing with trustees is what can become problematic.

    What can you do to protect yourself and your assets with either of these scenarios? Be represented – choose a representative who knows bankruptcy and have an open and transparent conversation with them. Let them structure your bankruptcy or proposal, negotiate with the trustee on your behalf and manage the process for you – since they actually represent you, the only person they are concerned about is you! You’ll end up with less stress and the best deal in the circumstances.

    If you are considering filing for bankruptcy or filing a consumer proposal, don’t deal directly with a Canadian trustee in bankruptcy. Call DebtCare instead. We represent you. 1-888-890-0888.

  • Ontario Bankruptcy Trustees – Who They Are and How They Advertise!

    debt careDebt consolidation, get out of debt, debt relief: it is hard to turn on the radio or television these days and not hear one or all of these phrases. Why? Because so many Canadians are facing financial challenges thanks to the ease with which credit is granted coupled with high (credit card) interest. The temptation to pay on credit can quickly lead to getting in over your head, and then struggling to find a solution.

    When it comes down to it, the question is, who advertises these solutions and what do they do?
    Ontario bankruptcy trustees, more aggressively now than ever before, are advertising to the public that they offer the best solution for people facing financial woes. We disagree with much of the advertising we hear from many Ontario Bankruptcy Trustees. Why? Because we exist because of them!

    Ontario bankruptcy trustees promote financial solutions. However, if you choose the solutions offered, the Ontario bankruptcy trustee does not represent you. A bankruptcy trustee in Canada is a court appointed officer who administers estates when a bankruptcy or consumer proposal is filed. They do not represent you, they do not represent your creditors. They apply rules set out in the Bankruptcy and Insolvency Act. The trustee is required to represent the best interests of all parties (and this includes their own financial interests).

    What does this mean? Well, trustees are paid a tariff out of the proceeds of your bankruptcy or consumer proposal. In the case of bankruptcy the fee is fixed, whereas with a consumer proposal the fee grows with the amount of the proposal.

    Some things to know:
    • Trustees advertise to you, despite the fact that they don’t represent you – this is because without you, they have no business.
    • In the case of bankruptcy, finding surplus income means that they can extend your bankruptcy and collect larger tariffs because the bankruptcy is being administered for a longer period of time.
    • In the case of consumer proposals, convincing you to propose a higher amount to your creditors will result in the collection of more fees – and thus is a major priority for them.

    Now, of course a few bad apples shouldn’t spoil the whole bunch, and we don’t mean to say that all trustees are shady. Many trustees in bankruptcy are reputable and do business above board – but the few that don’t can do a lot of damage. There are just too many conflicts of interest and the law needs to go further in terms of requiring trustees to state in their advertising that while they are promoting a service they don’t represent you.

    A consumer proposal or bankruptcy is often a really good financial solution for someone backed into a corner. These allow for one monthly payment, can reduce debt, stop interest, and stop collections. Just keep in mind, just as you wouldn’t go to a meeting at the CRA without your accountant, you shouldn’t go to a trustee without your own independent financial representation.

    Financial counsellors who specialize in bankruptcy and proposals can structure the numbers, review your information, make recommendations, and bring a proposal forward to a trustee on your behalf- protecting you throughout the entire process.

    DebtCare Canada represents your best interests – yours and yours alone. Call us today BEFORE contacting a trustee: 1-888-890-0888.

  • You Can Stop a Wage Garnishment in Ontario – Here Are Your Options!

    wage garnishment in OntarioWage garnishments impact thousands of people every day – and can come as a most unpleasant surprise for those individuals.

    Beyond the financial implications, a wage garnishment in Ontario can have serious consequences in other areas of your life. For example, if you work for someone else, once that individual receives a Notice of Garnishment regarding the wage garnishment, they will be fully aware of your financial problem and thus may view you in a different light. Responsibility and reliability may be questioned, and any company that required a credit check upon hiring may take this new information into consideration.

    If you work for yourself, especially with a small company, your reputation is important, but if your clients are receiving letters telling them to submit payment directly to the court, this could tarnish that reputation. The hassle may cause those clients to look elsewhere in the future.

    Once a garnishment is in place, is paying it off the only option? Perhaps not.  A wage garnishment in Ontario can often be stopped but this largely depends on who issued it.

    Here are a few of the most common types of wage garnishments in Ontario:

    1. Issued through the court – someone sued you, got a judgement and is enforcing it. Generally this can mean a loss of up to 20% of your earnings, and can only be stopped by paying the debt or making an arrangement with a creditor, by court motion, or by arranging a bankruptcy or consumer proposal with a debt counsellor.
    2. Issued by the CRA – the CRA does not need a court order, and can garnish up to 50% of your wages. If you are self-employed or on a pension this could be up to 100%. A CRA wage garnishment can only be stopped by: CRA’s consent or an arrangement, by arranging a bankruptcy or consumer proposal with a debt counsellor, or by taking CRA to tax court (the most expensive route). A CRA wage garnishment is particularly nasty….
    3. Issued by Family Responsibility – the only way to deal with one of these is to pay it in full or go back to court – there is no other option.
    4. Issued because of EI overpayment or by government after receiving money under false pretense – this can be complicated and these are instances where it is difficult to get protection. Like the CRA, this does not require a court order and if fraud is involved it can get tricky.

    When you are facing a garnishment of your wages, no matter the source, your best bet is to speak with a debt counsellor. The solution to your financial problem will largely depend on your personal circumstances, but ignoring the garnishment should never be an option.

    Avoid the embarrassment and financial hardship of a wage garnishment in Ontario by calling DebtCare Canada today at 1-888-890-0888.

  • Tips for Starting Summer on Fresh Financial Footing

    summer familySummer is here, the kids are out of school and you have the next 3 months to look forward to “mom, do you have $20 so I can go to the movies?” Summer, more so than any other holiday, can be one of the most expensive seasons of the year. This is your opportunity to seize the day and kick your summer off on fresh financial footing.

    Cut back on expenses. People are out of the house more in the summer, so look at expenses you can trim back on.

    • Find savings in the budget – Even if you can find 10% savings in your budget you will be ahead of the game. It is not that hard to do either. Look at cable for example: during the summer everyone is out of the house, so why pay for the full supply of channels? Walk around the house – how many TVs do you have with rented cable boxes? Those boxes cost $5-$10 to rent monthly, and getting rid of 1 or 2 doesn’t mean those TVs won’t work – it just means that they may not have all 9999 channels – but your pocketbook will be heavier!
    • Register kids for activities – Registering the kids for activities is actually often far cheaper during the summer than having them home (depending on the activity). Organized activities are not only good for your kids’ personal development, they also keep them out of the house and keep them from eating all your food and asking for activity money, mainly because organized activities often involve some form of lunch room so your kids can bring a lunch instead of scooping $5 from you to go out to eat with their friends.
    • Have a garage sale – Want to generate a lump sum to pay bills or even for kids’ summer activities? A garage sale is a great way to do it. If you haven’t used something in a while, just get rid of it. This gives you a financial benefit and also leaves you with a de-cluttered house =)
    • Grow some produce at home – Food is often a huge expense, so curb your grocery expenses by starting a garden in your yard. Savings on produce can add up to a minimum $20 per week savings in your grocery budget.
    • Take a good hard look at your debt – If your cash flow feels pinched, one reason may be because your monthly payments on loans and credit cards are too high. Summer is a better time than ever to sit down with a financial professional to look at ways that you can restructure your debt to put more cash flow back into your household.
    • Take advantage of free, fun, family activities – There are tons of free activities that you can do with the family to help save. Look at the GTA – the beach, Centre Island, a host of parks – there are so many “entrance free” activities to enjoy that you can surely find savings on the weekends.

    Trimming back coming into the summer and clearly communicating your plans with your family is your best shot to glide through summer on better financial footing. Call DebtCare Canada today for more summer budgeting tips: 1-888-890-0888.

  • Would You Go on Trial for Murder Without a Lawyer? Dealing with Debt

    Dealing with debtWould you go on trial for murder without a lawyer? We think it is safe to assume that the answer is no! Why? Because the stakes are high and the Crown attorney is a professional appointed by the Attorney General/Minister of Justice to enforce the law. Little old you can’t go up against a trained, seasoned trial lawyer!

    If you wouldn’t go on trial without a legal representative, why in the world would you ever go to a Trustee in Bankruptcy to seek help with your debt without financial representation?

    Like a Crown attorney, a Trustee in Bankruptcy is an officer appointed by a government official. Their duty is to administer bankruptcies and proposals under the Bankruptcy and Insolvency Act. Part of that duty is to ensure that your creditors get the fairest possible financial outcome.

    The law itself protects people when filing a bankruptcy or proposal, not the Trustee in Bankruptcy – they are simply administering legislation. While many advertise the benefits of contacting them about a bankruptcy or proposal, the law itself sets the stage for the benefits while the Trustee simply administers the process you are legally entitled to.

    Part of this process means evaluating your assets, investments, income and liabilities and determining how much money your creditors receive. In instances of consumer proposals, the Trustee receives payment based on a percentage of the proposal. Some have questioned whether this model poses a conflict of interest because a larger proposal = a larger fee.

    Also important is the fact that different Trustees administer files differently. While some deploy due diligence to verify the information in your application at the sign up stage, some have administration departments that do so after the fact. It is not uncommon, after a bankruptcy, for the bankrupt to receive communication from the Trustee that some information was incorrectly disclosed, meaning that you owe surplus income in your bankruptcy or that something that you thought would be protected won’t be!

    Where your financial future is concerned, the stakes are too high and that is why you should never go to a Trustee unrepresented. Do you need a lawyer? No, but you definitely need an experienced financial professional to guide you through the bankruptcy or consumer proposal process.

    Why is this different? Because you pay this professional directly! They are hired to represent and counsel you. Part of this counsel means working with you to structure your financial information and even bring it forward to a Trustee on your behalf. They will help you make sure that there are no holes in your application or unnecessary information that could cause you problems.

    If you are thinking about a bankruptcy or consumer proposal, do your due diligence. Both are effective solutions for dealing with debt, you just want to ensure that you end up with the fairest possible terms.

    For more about effective representation in the bankruptcy or consumer proposal process please contact DebtCare Canada today by calling 1-888-890-0888.

  • Income Tax Time is Here – Preparing for the 2015 Tax Deadline

    2015 tax deadlineCanada’s income tax deadline for the 2014 tax year is right around the corner! While some anticipate refunds and are off to file with bells on, others are dreading this date and even considering not filing because of a tax debt that will follow.

    First of all, if you think you will owe, not filing is not the answer. You may think it will buy you time, but really all it will buy is penalties, interest and a bad history with CRA. If you think you will owe, be realistic about what you will owe and your ability to repay.

    Now, it is true that once you file CRA will ask you to pay the debt in full. With that said, CRA has been known to accept payment plans of up to 24 months on a tax debt. While there is no guarantee that this will happen for you, it has happened for others.

    If you took the amount of your tax debt and divided it by 24 months, would you be able to afford to repay the debt?

    If the answer is yes, the next steps you take are crucial.

    Negotiating directly with CRA can be dangerous. Before agreeing to any monthly payment arrangement they will ask for full disclosure of your assets, income, income sources, debt and more…

    The challenge here is that they may agree to payments over a 6 month period, based on a 24 month repayment, and then at the end of 6 months take the option to re-review your financial information. At this point they can reject renegotiating the monthly payments, demand payment in full and then use the information in your financial disclosure to take collection action against you.

    Another common occurrence is that when you submit an honest budget which includes your minimum obligations to other creditors, the CRA may then reject those payments and say that any surplus funds which could be directed to other creditors need to be directed to CRA. Even with all of this said, you absolutely do need to do something.

    If the answer was no…

    If you know that repaying the debt monthly, even over 24 months, is highly unlikely, you need to get some financial assistance immediately. A professional experienced with financial restructuring may be able to come up with a solution where you can repay the debt over a longer term, say 5 years.

    In either scenario…

    In either case, professional help is a necessity. Negotiating with CRA is, to be frank, too dangerous financially. Financial professionals with knowledge regarding dealing with CRA know how to navigate the bureaucracy and protect your information.

    Don’t ignore a tax debt in the hopes that it will magically disappear – it won’t. Call DebtCare Canada today: 1-888-890-0888.

  • Getting Out of Debt Blog Series #3: Debt Consolidation

    Debt ConsolidationWhen debt is taking over your life it can be difficult to see the light at the end of the tunnel. Mounting monthly payments that include mostly interest can become difficult to meet and missed payments can lead to collection calls or other enforcement action. You are not alone – many Canadians are dealing with heavy debt loads and don’t know where to turn. This 3rd blog in our ‘getting out of debt blog series’ talks about debt consolidation and provides you with the information necessary to help you determine whether this is the best route to take for getting out of debt.

    What is debt consolidation? It is pretty straightforward – a consolidation of your debt into one monthly payment, saving you thousands of dollars in interest and making the monthly payment far more manageable. It is a loan given by a financial institution which allows you to pay off all of your unsecured debts to creditors at once (secured debts such as car loans or mortgages are typically never included).

    A debt consolidation can be achieved through a secured or unsecured loan or line of credit. Secured consolidation loans often involve a house, vehicle, investment or guarantor as security.

    Obviously if you obtain a debt consolidation, your credit is paid off and the result will be no further collection or enforcement action by your creditors. Debt consolidations will also in some cases lower your interest rates and monthly payment. If you have damaged your credit, or are having enforcement action taken against you by your creditors and have no assets to pledge as security – being approved for a debt consolidation can be challenging.

    Debt consolidation is not for everyone. Often in order to qualify your credit needs to be acceptable since the institution lending the money will want some indication that you will be able to make the required monthly payments. If your credit rating is less than stellar it might be more prudent to consider some other alternatives. The more bruised your credit is, if approved, the higher the interest rate on the debt consolidation will be, which may leave you in no better shape than when you started.

    A smart way to determine how best to approach your ‘getting out of debt’ solution is to speak with a professional debt consultant, one experienced with helping Canadians find effective forms of debt relief. A consultant will be able to go through all of your financial obligations to help determine what means for getting out of debt are best suited to your unique situation. He or she will also be able to get the ball rolling and get you started on a debt-free road as well as help you to budget realistically for the future.

    If you are in debt that you feel is becoming tough to manage it is probably time to consider getting some help. Don’t wait until the debt takes complete control.

    For more information about debt consolidation or getting out of debt please contact DebtCare Canada by calling 1-800-890-0888 or visiting us online at www.debtcare.ca.

  • Is the Big Bad Wolf Calling?