Category: Debt Solutions

Rebuilding Credit: Bad Credit Rating Doesn’t Always Just Disappear After a Few Years
It is a very common misconception that bad credit just “disappears” once debts are paid and your credit behaviour improves. However, past credit activity doesn’t just evaporate into thin air with a few months (even a few years) of good behaviour. Rebuilding credit takes some work.

For example, if you file for bankruptcy in January of year one, pay on time, every month, and are discharged in January of year 3, that bankruptcy will remain on your report for 6 years following the date of discharge (January of year 9) – not from the time that you declared.

When it comes to consumer proposals, these stay on for 3 years following payment in full, as does any credit counselling.

Periods of inactivity can also impact your credit rating. For example, if a lender assigns debt to collections, this results in activity, and negative activity at that. However, if you don’t have any activity, this is not necessarily a good thing either.

When it comes to activity, a tip is to continually use credit and to repay that credit on time, all the time. A secured credit card is a good way to do this without being tempted to start relying on credit again or getting back in over your head.

So, if you have bad credit and want to clean it up, here are a few steps you can take to get the process started:
- Step 1 – Get your credit report and see what it says. These are available online from both Equifax and TransUnion. Some lenders use one, whereas some look at both.
- Step 2 – Deal with the bad credit debt on your credit report by paying it off. Better yet, settle it for far less than you owe with a consumer proposal to stop interest and reduce overall amounts.
- Step 3 – Document EVERYTHING. Any time you settle a debt, get a letter re: settlements and arrangements and copies of proof of your action. It can take some time for these payments to register, but keep on top of it.
- Step 4 – Make sure the credit reporting agency knows these debts have been paid – don’t count on your lender to tell them. Send the above noted documents via registered mail to ensure they reach their intended destination.
- Step 5 – Begin the process of rebuilding. Consider a secured credit card to show you are committed to maintaining positive history.
When it comes right down to it, the only way to improve a poor credit rating is to pay your debts and allow time to pass to show that your payment habits have improved.

For more information about how to rebuild your credit effectively, call DebtCare Canada today at 1-888-890-0888.
July 15, 2015
De-Thawing Your Account: How to Get a Frozen Bank Account Unfrozen
Spring has sprung and while the snow and ice may have melted, the truth may not be the same for your bank account. Having your bank account frozen is both embarrassing and can cause considerable unexpected financial problems – especially if your pay goes into the account and you have bill payments set-up on pre-authorized withdrawal.

When it comes to getting a frozen bank account unfrozen, your options depend on who froze it to begin with. Here are the most common types of frozen bank accounts:
- Account was frozen because a creditor obtained a judgement from the court with respect to a debt and has frozen the account accordingly.
- Account was frozen by Family Responsibility – you have a very big problem here.
- Account was frozen by Canada Revenue Agency. This is another big problem – CRA doesn’t need to go to court or get a court order against you to freeze your bank account.
Here are your options:
1. Pay the debt you owe – through your savings, investments, assets or financing.
1. Contact the other side and try to negotiate an arrangement that is satisfactory so that they voluntarily lift the freeze – good luck once a freeze is in place.
1. Go to court and ask a judge to lift the freeze on your account. This option is costly unless the enforcement action relates to a judgement obtained in small claims court. If this is the case, you can represent yourself. You can technically represent yourself in family court and tax court but it is not recommended.
1. Make a proposal. Making a proposal to your creditors immediately stays any collection action and will immediately see a frozen bank account unfrozen. In a consumer proposal, your creditor(s) is offered a sum to settle your debt with a monthly repayment schedule over 5 years. At the end of 5 years, the debt would be paid in full (the consumer proposal can actually be paid at any time). The only circumstances in which a consumer proposal cannot unfreeze a bank account is if it relates to unpaid Family Responsibility or if it is related to some form of fraud on the government that is not protected by a proposal.
Some people are surprised to learn that a consumer proposal can actually stop CRA collection action, such as a frozen bank account, as most perceive CRA as the almighty creditor.

If your bank account is frozen, your options are clear. If there was money in the account you need to act fast as often the bank will hold the money in your account for a number of days, or if remitted to the court, the court may also hold the funds for a period of time before they are given to the other side.

Find out more about getting a frozen bank account unfrozen by calling DebtCare Canada today. We can help: 1-888-890-0888.
May 11, 2015
Holiday Spending Got You in a Crunch? Check Out These Credit Card Debt Solutions
Happy 2015 everyone! The holidays are wrapping up and that means that it is time to get back to reality, which, for most of us, means looking over those holiday bills that we’ve been attempting to avoid for the past month. If holiday spending has you in a crunch, check out these credit card debt solutions to help get those finances back on track.
- Stop using those cards! Right now. Take them out of your wallet, lock them away, and forget that you even have them. If most of your holiday spending was done on a credit card – whether as a way to gather points or just because it was more convenient than using your debit card – it is time to stop that trend.
- If you can, pay off the balances in their entirety as soon as possible. If you are able to do so, avoid snowballing interest charges by paying off the totals at the bottom of that bill.
- If you can’t pay off the balance in full, pay off as much as possible – try not to pay just the minimum payment required. This is mostly interest and won’t do anything as far as bringing that debt down.
- More than one credit card? Try starting with the one with the highest interest rate and paying as much as possible each month. Then move on to the next one. Make sure that you continue to pay at least the minimum payment for every other card though – there is no point in paying off the one with the highest interest but letting the others go to collections!
Finally ready to admit that the debt that has accumulated is not just a result of holiday spending, and thus may be a bit larger than you can comfortably or realistically get rid of with these tips? It might mean taking a different route to get to financial freedom. Debt consolidation, a consumer proposal or even bankruptcy may be the right option to help you get rid of that mountain of debt that has not only become stressful but has also begun to impact your personal or work relationships.

DebtCare Canada has the experience and knowledge with debt solutions to help you get out of debt – whether it is holiday debt or all-year round debt. For more about the various options available to you please call us today for a free assessment at 1-888-890-0888.
January 5, 2015
Realistic Debt Solutions – What Are Your Options?

Being in debt can be a drag – but there are options available. However, before making any decisions about which route to take it is always a good idea to understand what each of the various debt solutions entails. Check out our chart to find out the main differences between the 4 most popular debt solutions out there.

For more information about any of these debt solutions or to get a plan started please contact DebtCare Canada by calling 1 (888) 890-0888.

March 17, 2014
Mortgage Refinancing: A Viable Debt Solution?

Debt in Canada has become a major problem for many individuals. The ease with which credit is granted by many credit companies sometimes makes it tough to avoid temptation, but the aftereffects can be distressing, especially if it gets to the point that it is hard to keep up with or make payments. There are many debt solutions out there, one of the most popular being mortgage refinancing.

What is mortgage refinancing? When you refinance your mortgage to consolidate debt you are essentially using your home equity to pay off debt. Many people choose to refinance their mortgages to pay off debt because mortgage financing offers flexibility and often you can get a far lower interest rate as well as the convenience of a much more manageable single monthly payment.

Over the past year there have been many changes to Canadian Mortgage and Housing Corporation (CMHC) rules, many of which make it tougher for homeowners to consolidate using mortgage refinancing. Previously CMHC would refinance as much as 95% of an individual’s home, and would offer lines of credit to do so. However, they no longer issue lines of credit to consolidate, and the amount has been lowered to 80%.

The banks have backed these changes. As a general rule, banks will only grant refinancing if your new mortgage will not exceed 75% of your home’s current value (some approve at an even lower percentage). That means that if your new mortgage plus your unsecured debt is more than 75% of the value of your home, approval is not likely.

CMHC insured mortgages are one of many mortgage options for refinancing your mortgage to pay off and consolidate debt. There are so many different types of companies outside of the banks who will compete for your business: credit unions, finance companies, trust companies, mortgage investment firms and even private individuals.

What if your credit isn’t great? If you have less than stellar credit it might be harder to obtain mortgage refinancing for debt consolidation through a bank. Banks and finance companies like to see that those they invest in are not a high risk, and if your credit is bad you may be too risky. With that said, if you have good equity many other lenders may be willing to extend financing to you. If you seek mortgage refinancing as a debt solution but are unable to find approval, an alternative solution might be a better option. Non-mortgage refinancing debt consolidation, a consumer proposal or bankruptcy might be better suited to your situation.

If you are thinking about mortgage refinancing as a possible debt solution, it is best to speak with an experienced debt consultant first, one who will assess you and present you with all of the financial options available to you, the pros and cons, and guide you to the best financial plan.

For more information about mortgage refinancing please contact DebtCare Canada today by calling 1-800-890-0888.

September 16, 2013