debtcare.ca

Tag: deal with debt

  • Holiday Budget Planning: Tips to Keep The Season Cheerful

    holiday-budget-planningSo many of us are guilty of overspending during the holidays; the gifts, the outfits, the events, the food. All of this spending can quickly spiral out of control, turning what should be a joyous season into a stressful one. This is especially true if we start early and don’t keep track of what we’ve purchased. This year, keep the stress at bay with these holiday budget planning tips.

    Set a budget – and stick to it! This should always be the first order of business. Take a realistic look at your bank account and set a total that you can spend without setting yourself up for a massive bill once the holidays are over. Set an amount for each person you need to buy for and stick to it.

    A great way to do this is with the envelope system. Once you’ve set an amount, put that amount in an envelope with the receiver’s name on it. Once the envelope is empty, that person is done.

    Keep a list. All too often we buy, assume we are finished, and then see ‘that perfect gift’ that so-and-so just can’t live without. Trust us, they can. Keep a list of what you’ve purchased for each person, and consult it when you’re wondering if you have ‘enough’.

    Go DIY. Personal, hand-made items are often far more special than something purchased from a store. Take advantage of the countless boards on Pinterest and make some gifts. Just be careful, some DIY gifts are actually pretty costly, so just price out the items before diving in.

    Host a potluck. It isn’t just the gift giving that adds up around the holidays. Hosting a big party and providing food for all of your guests can get pretty costly. This year, instead of handling all of the food yourself, ask guests to bring their favourite holiday dish. This not only spreads the spending around, it may just open your eyes to new recipes to add to your cookbook!

    Start saving now for next year. Now is the time to start thinking about saving up for next year. Once the holidays end, start putting away even just a few dollars a week – once next November rolls around, you’ll have an impressive little nest egg from which to draw.

    Have a plan to deal with holiday debt. If you know that, no matter what you do, your budget won’t be able to handle the extra spending, and your credit will take a major hit, have a plan in place to deal with the debt.  Get in touch with a financial specialist to discuss all of the options available to you and get ready to start 2017 off on fresh financial footing.

    At DebtCare, we know how tough the holidays can be when money is a concern. Let us help.

    Get in touch today to find out about strategies to deal with debt before it gets any worse. 1-888-890-0888.

     

     

  • Dealing with Collection Agencies: Harassment and The Collection Agencies Act

    In Canada, if you have a debt that goes into default, your creditor can assign your debt to a collection agency to be collected. The collection agency will then attempt to collect the debt from you. They will do this by calling you, sending you letters, and some creditors will even grant collection agencies the authority to sue you.

    Dealing with collection agencies is no fun! When a collection agency is after you they can be ruthless and even harass you. Some people find themselves feeling powerless when dealing with collection agencies.

     

    Dealing with collection agencies used to be even worse than it is now, but as a result of public outcry, the government decided to begin regulating them. Collection agencies are regulated provincially and all provinces have legislation that regulates the activities and conduct of collection agencies and their collections. In Ontario, for example, this legislation is referred to as the Collection Agencies Act and is administered by the Ministry of Consumer Services.

    Although all provinces regulate collection agencies, with regulations varying from province to province, here are some things that, across the board, collection agencies can’t do.

    • Ask you for payment without first having notified you in writing that they have been retained by your creditor to collect the debt.
    • Make phone calls to you with a frequency that would be considered harassment.
    • Make phone calls to you outside of the days and hours the legislation in your province mandates.
    • Ask you to pay a debt without having provided you with the name of the creditor and the total amount owed.
    • Provide personal information to third parties, such as other people in the household, or leave it on your voicemail.
    • Contact your employer (unless there is a court order), neighbours or friends to obtain an address or telephone number for you.

    Sometimes life throws us a curve ball and no one wants to end up with a debt in collections. Having a debt in collections is an indication of an underlying financial problem. While you may be able to count on things like the Collection Agencies Act to control the behaviour of your creditor’s collection agencies, you won’t be able to stop dealing with collection agencies until you have a plan to deal with your debt.

    So many people get stressed out when dealing with collection agencies that, instead of facing the debt head on, they alter their lifestyle. They stop opening mail or answering the phone. Don’t do this!

    There are financial solutions to deal with debt that is in collections and companies that specialize in these types of problems. Some financial solutions can even reduce the size of your debt or freeze the interest on your debt, and all financial solutions will stop collection action!

    Just imagine your life without the phone ringing off the hook every moment. Imagine being able to rebuild your credit. Imagine having control over your debt. All is possible – it’s up to you to take the first step.

    For more information about dealing with collection agencies or if you need help with a financial problem please contact DebtCare Canada at 1-888-890-0888 or visit www.debtcare.ca.

  • How to Rebuild Your Credit Blog Series – Part 4 Having Too Many Credit Products and Too Much Debt

    This is the fourth blog in a 4 part blog series about how to rebuild your credit. When you accumulate too much debt or have too many credit products, this can harm your credit. Credit card companies are aggressive, using marketing points programs, promotion and incentives to entice consumers to take out a credit card. Over time, it is not difficult to find yourself with several different credit cards with balances that are accumulating interest.

    If you want to know how to rebuild credit and you have several credit cards, your first step will be to close some of them. Some financial advisors will tell you that closing credit cards will actually harm your credit, when in fact in the long run getting rid of credit cards will increase your credit score. Having one or two credit cards is sufficient to have good credit so if you have more than that, closing some of them is a good idea. How you go about closing credit cards is the key.

    Firstly, closing all of your credit cards is not a great idea unless it is part of an overall plan to settle out your debt, and then taking out a single card to rebuild your credit. Simply closing down all of your credit cards without a plan to have a credit item to rebuild credit will reduce your credit score. If you have accumulated a lot of credit card debt and are working with a company to get rid of your debt with a plan to rebuild, then naturally it will involve wiping the slate clean (clearing and closing all credit card debt) and then starting fresh. In the absence of a financial plan to rebuild, closing all of your credit cards may reduce your credit score because you will not have credit reporting to your credit report. This is necessary to build your credit score because it shows new potential creditors, mortgage providers for example, how you pay your monthly obligations.

    Also, do not close out credit cards that have balances. If there are balances on credit cards you should first deal with the balances either by paying them off, settling them, or including them in a financial program to get out of debt. Once the balances are cleared, you can go ahead and close out the card. If you close cards when you have balances the result will be a credit card that has a balance and a zero credit limit and this will have the same negative impact on your credit report as if you have a credit card that is maxed out (see part three “Credit Balances That Are At, Close to or Over” in our four part blog series How to Rebuild your Credit).

    Additionally, if you plan to close out your credit cards make sure you write to the credit card provider clearly indicating that it is you who wants to close out the credit card balance. When a creditor closes your credit card they can report one of two things to the credit bureau: “credit limit closed by consumer” or “credit limit closed by credit grantor” – you do not want the latter reported on your credit report. Sending a letter will enable you to prove to Equifax that you in fact closed the card in the event that the credit does not report who closed the card accurately.

    This may all seem like good advice, but if you are drowning in credit card debt, closing credit cards right now is not really an option without a financial plan. Learning how to rebuild your credit takes time, as does dealing with accumulated credit card debt. There are fast and effective methods to deal with debt and start rebuilding your credit, but in most cases they will involve the assistance of a financial professional who can guide you out of your debt with a plan.

    If you would like more information about how to rebuild your credit or if you are in debt and need some guidance, please call DebtCare at 416-907-2582 or visit www.debtcare.ca.

  • Debt Reductions Companies in Canada – Do Your Due Diligence

    When making a big ticket purchase like a vehicle, you do your research right? You check the history of the vehicle, ensure it has not been in accidents, learn about the ownership, check the maintenance record for the vehicle and more. Your personal finances are no different and if you are in financial trouble, before choosing a company to help you, you really should do the same kind of research.

    “The banks are offering a program that’s about to run out” or “time is running out on Federal Government Programs”; sound familiar? Debt reduction companies are spending hundreds of thousands of dollars on advertising per/year to sell you on this message. The question is; is it true? And do they “really” help? Is there really a program that all of the banks collaborated on and is time running out? Is it true that the Federal Government programs that help Canadians get out of debt could end in the near future? And…what do they do anyway? Let’s get to the bottom of it.

    First of all; all of the banks have not gotten together to offer a debt reduction program, hence time is not running out; because it simply isn’t true. The only Federal Government programs that help Canadians deal with debt are administered under the Bankruptcy and Insolvency Act (BIA). The Federal Government has made no announcement that there is a plan to eliminate the BIA legislation and there is no other Federal Government program that we are aware of that helps Canadians get immediate, legislated, debt relief. Seeking debt relief under the BIA does not mean that you have to go bankrupt and Federal Government programs are a viable means to get out of debt when a financial crisis emerges. The BIA offers different remedies to deal with debt, but the principal program offered by debt reduction companies doesn’t even involve relief under the BIA.

    Debt reduction companies collect money from you on a monthly basis over a period of years with a promise that in the future they will settle your debt. By way of contrast, debt consulting companies represent you and provide you with a range of options to deal with debt that could include a consolidation or even enrolment in a credit counselling or Federal Government program. Debt reduction companies have one primary goal and that is to collect your money on a monthly basis. This is where the money that they use to advertise to you comes from. The Financial Consumer Agency of Canada (FCAC) recently issued a consumer alert about debt reduction companies; you can view the alert here http://news.gc.ca/web/article-eng.do?nid=649969.

    Before you deal with a debt reduction company, do your due diligence. While writing this article we took some simple steps that any consumer who has access to a computer can take to research a company; the results really scared us.

    We visited the first debt reduction company’s website and there were many red flags. First, there wasn’t any information about the company’s ownership. Are they Canadian? American? Who is their president and what does he or she stand for. The company publishes no information about their ownership whatsoever. Red flag #1!

    We Googled “who owns [company name]” and nothing came up. Red flag #2!

    We went to Linkedin and ran a search by company name to see how many professionals on Linkedin are employees of the debt reduction company. The only profile that came up was an individual page branded for the company – not one employee and not a single name of anyone associated with this company emerged as a result. You would expect that a company that bills itself as a national provider of debt reduction services would have at least one employee with a profile on Linkedin; the world’s largest professional networking site. We would liken this to you not knowing a single person who has a Facebook account. Red flag #3!

    Finally, we searched “[company name] reviews” and on the first 3 pages of Google we found no less than 6 pages by companies who represent people and individuals themselves who reported very serious claims about this debt reduction company. Red Flag #4!

    Don’t believe everything you hear! Ads are paid for by the advertisers, companies pay the BBB to be members and any company who doesn’t wilfully and publicly provide information about their corporate structure and ownership, may not be a company you should commit to paying hundreds of dollars per/month for years to come.  When it comes to debt reduction companies do your due diligence.

    For more information about debt reduction companies and how you can do your due diligence please call DebtCare Canada at 416-907-2582 or visit www.debtcare.ca

  • What is a Good Budget and What is a Debt Service Ratio?

    The first step to building a positive financial future is to have a budget and to understand your debt service ratios. What is a debt service ratio? There are actually two kinds of debt service ratio. A debt service ratio is a measurement used by the bank to determine if your bills represent an acceptable proportion of your income.

    The two primary debt service ratios are your gross debt service ratio (GDS) and your total debt service ratio (TDS).

    Your gross debt service ratio represents your monthly house payment divided into your gross monthly income, expressed as a percentage. The maximum acceptable gross debt service ratio is 30%. With that said, 30% is the limit so if your GDS is 30% that is not really positive. A healthy budget should include a GDS that’s approx. 25%. If your GDS is more that 30% this is an indicator that your housing payments are too high.

    Your total debt service ratio represents your monthly housing payment plus your monthly payments to all loans and credit cards, divided into your gross monthly income and expressed as a percentage. The maximum total debt service ratio is 40%. With that said, 40% is the limit so if your TDS is 40% that is not really positive. A healthy budget should include a TDS that’s approx. 30%. If your TDS is more than 40% it is an indicator that either your housing payments or your payments of other debt are too high.

    GDS and TDS are two components of a budget. What is a good budget? A good budget involves reasonable housing payments and reasonable payments of debt and expenses with surplus income left over to contribute to savings. A good budget should factor in all of your expenses. One key to positive money management is awareness. There are three primary budget related factors that contribute to families that live paycheque to paycheque. The first is unrealistic housing payments, the second is over spending and the third is too much debt.

    When looking at your budget, consider what you spend on things like entertainment, food (especially take out and dining out) and shopping. These are the three most common places that wasteful spending occurs. Avoid credit cards and use cash as opposed to your debt card an effective way to be more aware of what you spend and to avoid incurring more debt. Set yourself a daily cash allowance that includes a weekly personal reward so following your budget is not all work with no play.

    Where debt is concerned, take a good hard look at how much you owe and how you are paying your creditors. If you are only able to make minimum payments or are finding it difficult to even make minimum monthly payments, this is a sign that you may be over-extended. Sitting down with a debt consultant is one good way to realistically review the debt that you owe and your budget to come up with a financial strategy to deal with debt and improve your financial situation. If you still have questions as to what it a good budget or about debt-servicing, debt consultants can generally answer those questions for you too.

    For more information about building a good budget and gaining a better understanding of your debt service ratios please contact Michael Goldenberg at DebtCare Canada by calling 416-907-2582 or visit www.debtcare.ca