debtcare.ca

Category: Debt Management

  • 2 Ways to be Out of Debt Within 5 Years

    When you’re in financial trouble, you want to get out of debt quickly. But finding out how to pay off debt fast can depend on many factors:

    • The amount of debt. If you are carrying a lot of debt, the time to pay it off in full may be longer.
    • How much debt and interest you accumulate along the way. The problem with paying off high-interest debt is that the interest continues to add up. If the debt is high enough, you may only be able to afford the interest payments each month, leaving you still in debt.
    • Your income level. Unless your income level drastically changes, it might be hard to find room in your current budget to truly get out of debt fast without your quality of life suffering.

    Some credit cards can take up to 96 months to pay off in full — the equivalent of eight years! That’s eight years of scrimping and saving and constantly having to think about debt payments. There is a better way.

    In order to get out of debt fast you need a solution that:

    • Is realistic and sustainable. You want this to last for the long-term.
    • Is easy to access. If your credit score is hurt, options may be limited.
    • Avoids high-interest payments or fluctuating interest payments.

    Luckily, there are two solutions that meet all of these requirements and more! Pay off debt quickly — within five years (or sooner!) — with one of these methods:

    1. Second mortgage amortized over five years.

    If you own your home, you may be eligible for a second mortgage. You can amortize this mortgage over five years and then use the equity to pay off your debt in one lump sum. Then, over the next five years, you can pay the second mortgage back in fixed, scheduled payments.

    You will always know what you are paying and when you are paying it. This will allow you to budget wisely and with flexibility.

    1. Filing for a consumer proposal.

    If you don’t own a home, or a second mortgage isn’t an option, filing for a consumer proposal may be the way to go. In a consumer proposal, you make an offer to your creditors to pay your debts for less than you owe. The creditors must feel confident that they are getting more back than they would if you filed for bankruptcy instead.

    Once you are in a consumer proposal, you have five years to pay it off. You can do so sooner if you have the money available. This will allow you to clear your high-interest debts quickly and pay back one monthly payment over a planned, fixed schedule.

    Within five years, you can be debt free and with a lot less stress along the way!

    Interested in exploring your options? DebtCare Canada can help. We provide access to second mortgages, first mortgages, home equity lines of credit, and more to people with all types of financial situations.

    Or, if you’re thinking about filing for a consumer proposal, our financial advisors will make sure you are protected and getting the best deal possible.

    Contact us today for a free consultation. 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.

  • A Stress-Free Holiday May Start with Consolidating Your Debt

    The holidays can be a time of family, love, and joy, but they are also often a source of major stress — financial stress to be exact.

    Have you considered consolidating your debt to manage that stress?

    More than half of Canadians say that they go over their budget during the holiday season. A CIBC poll found that the average Canadian spends $643 on holiday gifts and $300 on décor and entertaining. And those figures only keep going up.

    Moneris found that after the 2017 holiday season, Canadians spent an average of 4.26% more during the last three months of 2017 than they did during the same period in 2016.

    A 2017 Angus Reid poll of 1,512 Canadians found that three-quarters of respondents wish they could save more money during the holidays and about 52% end up spending more than they liked.

    In order to avoid any long-term damage to your credit score, it’s important that you pay your bills on time each month and (preferably) in full. Making the minimum payment every month is not enough to ensure good credit.

    Plus, most credit cards come with high interest rates, so that $1,000 of debt can quickly add up to even more. If it took you five months (the average timeframe) to pay $1,000 at an interest rate of 18% you would have to make a payment of $209.09 per month and by the end of the five months would have paid $1,045.45, including interest.

    That might be okay if it is your only debt and you are not accumulating any more, but for most people that is not the case.

    While a certain amount of spending is likely expected during the holiday season, it can be particularly stressful if you are already carrying debt.

    For instance, say that you have:

    • $10,000 of debt on one credit card at 19% interest.
    • $5,000 of debt on another at 21% interest.
    • And now $1,000 on a new credit card at 18% interest.

    And you are hoping to pay it off by the next holiday season — in 12 months.

    You would then have to make monthly payments of $1,477.03. By the end of the year, you would have spent an additional $1,724 in interest. And that’s assuming you don’t accumulate any more debt or miss any payments. This also assumes you have the ability and tools to calculate the combined monthly payments of all these debts, which most people struggle with.

    It can be stressful trying to pay off holiday debt, but it helps to have a plan. That’s where consolidating your debt can come in.

    With debt consolidation, you can put all of your outstanding debts together in one monthly payment. If you choose a consolidation loan with a fixed interest rate you will only have one bill to pay each month and you will always know the amount you have to pay, so you can budget for your payments.

    This can allow you to enjoy your holidays without worrying about how you will pay for them.

    At DebtCare Canada, we can review your options and help arrange the debt consolidation that’s right for you. You’ll be able to enter the holiday season feeling relaxed and stress-free.

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

  • 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.

  • 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.

  • Get Ready for 2016

    2016 is here! This year, make getting your finances back on track your goal – and then make it a reality! Schedule a free consultation to review your credit and finances to come up with a financial plan for the New Year!

    At DebtCare Canada, we can help you ring in the New Year with a plan to get rid of debt and rebuild your credit. Call us today at 1-888-890-0888.

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  • Back to School Blues? Consolidate Credit Cards and Stop the Interest

    The back to school season, particularly for parents, is often a very hectic time of year, especially with regard to finances. The need/desire for new school clothes, shoes and supplies often leaves parents with racked up credit cards once all is said and done – or rather, purchased. And often accompanying these credit card bills is the challenge of finding money to pay them off.

    Check out this infographic from BMO to see just what these costs add up to:

    debt1

    So, what options are available? Consolidating credit cards is a great way to reduce your debt – and often makes sense – but the type of consolidation depends on your own personal circumstances. Here are a few options that may be available to help you deal with that back to school debt.

    1. Home equity loan. By using the equity in your home, you can consolidate credit cards, thereby reducing interest and consolidating the various bills into one monthly payment. Of course, this is only possible if you own a home and have sufficient equity for this purpose. If you rent, or are without equity, this is probably not going to be a viable option for you.
    2. Consumer proposal. This is another great option, especially if your credit isn’t great or if you don’t have the security or equity for a loan. A consumer proposal will have some impacts on your credit in the short term, but this is balanced out by the fact that interest stops accumulating, there is, like a loan, just a single monthly payment, and in many cases the overall debt owing is reduced.
    3. Line of credit or loan from a lender. This is another good option, and can achieve the same things as a home equity loan: lower interest and one monthly payment. You will need to have good credit or security for this option. At the same time, this is often the most expensive option of all because it will involve higher interest than a home equity loan or a consumer proposal.

    Kids are expensive, and when back to school season rolls around, they can become even more so. Once those bills start coming in, don’t stress. Call DebtCare Canada to find out about how to consolidate credit cards and get rid of debt: 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.

  • Helping Out – Finding the Right Debt Management Firm

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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