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Tag: debt consolidation

  • 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.

  • Find Out the Best Debt Consolidation Method for You [Debt Calculator]

    What is the best debt consolidation method for you?

    You might think you know the answer — or have no idea. Either is fine!

    But if you want to get out of debt for good, it’s time to put the question to the test.

    Enter our new tool, the online debt repayment calculator.

    With this tool, you can quickly and easily calculate how you can be out of debt in five years or less!

    All you have to do is enter your total debt (excluding mortgages), then the calculator will do its work.

    It will show you how much it will cost to pay off your debt over five years, compared by debt consolidation method, and how much the monthly debt payment would be.

    For instance, if you had $100,000 worth of debt, your options might be:

    • Do nothing – this would cost you $158,963.30 over five years with a monthly payment of $2,649.39 per month.
    • Debt consolidation — this would cost you $133,466.69 over five years with a monthly payment of $2,224.44 per month.
    • Credit counselling — this would cost you $110,000 over five years with a monthly payment of $1,833.33 per month.
    • A DebtCare solution — this would cost you $30,000 over five years with a monthly payment of $500 per month.

    Try it for yourself! Access the debt calculator here.

    *This calculator is for demonstration purposes only. The results will vary depending on your specific circumstances which include your income and any assets. A minimum of $6,000 of unsecured debt is required.

    If you have any questions or want to take action on getting debt free for good, Contact DebtCare Canada today by phone at 1-888-890-0888 or try our free online assessment at https://debtcare.ca/form.html. We can assist you with paying down your debt and getting a fresh start.

  • 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.

  • Will You Wait for the Canadian Interest Rate Surprise on July 11?

    Most years, July 11 is just another day. But in 2018 it could mean a change to the Canadian interest rate.

    The Bank of Canada has scheduled its next interest rate announcement for July 11, 2018. This is when they will publicly say if interest rates are going to increase again or not. If they do increase, unsecured debt will be affected. Could you handle a hike?

    If you’re not sure, it may be time to think about other options.

    One of those options might be mortgage refinancing. If you’re saddled with a lot of high-interest, unsecured debt, such as credit cards, student loans, or other consumer debt, refinancing your first mortgage could give you a lifeline out.

    Essentially, a first mortgage refinance would give you money based on equity available in your home. You could then use that money to pay off your outstanding, high-interest debts. You will then be left with a single monthly payment with a significantly lower interest rate.

    Even if you’re not struggling with debt, you may be considering refinancing your first mortgage for other reasons – perhaps there’s a home renovation project you’d like to undertake, or you’re planning for a big purchase, or you have a lot of equity available in your home and want to take advantage. Whatever the reason, if you’re considering refinancing, it’s better to do it now than after interest rates increase even further.

    Why would you want to refinance before an interest rate change? For one thing, if you’re on a variable-rate mortgage, you may want to lock into a fixed-rate mortgage so your payments won’t fluctuate with the interest rate.

    If you’re thinking about refinancing your first mortgage, doing so will get more expensive as interest rates rise, which means you could be saving less over the long run.

    Take the following example:

    You have a mortgage for $200,000 with Lender A at a 7% interest rate, and you have $20,000 in credit card debt. You find that you can get a mortgage of $220,000 from Lender B with a 5% interest rate. You use the $200,000 to pay off Lender A, and the $20,000 to pay off your credit cards, and then you repay Lender B over the long-term with a lower interest rate.

    But if interest rates keep rising, you might not be able to secure as low of an interest rate for your refinancing, which could make the loan harder to pay off.

    If mortgage refinancing is on your mind, but you’re not sure if it’s the right move, we can help. DebtCare Canada can assess your situation to determine whether refinancing your first mortgage is a good idea, or if another debt consolidation method would work better.

    Don’t wait until July 11. Get in contact today to go over your options.

    Call us for a free consultation: 1-888-890-0888.

  • Bank of Canada Mortgage Rates Stay at 1.25% After May 2018 Announcement

    The Bank of Canada mortgage rate is remaining at 1.25% for now.

    In an announcement on May 30, 2018 the Bank of Canada (BOC) said that the overnight interest will stay at 1.25%, at least until the next statement scheduled for July 11, 2018.

    The BOC said it is proceeding with caution, but that it still believes higher interest rates will be needed for the future.

    Since July of 2017, the BOC has raised Canadian interest rates (and correspondingly Canadian mortgage rates) from a record low of 0.5% to the current 1.25%. There have been three increases during that time, with the most recent hike happening in January of 2018.

    Despite the May 2018 hold, economists are predicting that the BOC will raise interest rates at least once more in 2018 — and it could be during the July 11 announcement. Currently, the predicted chances of a July interest rate increase are sitting at about 55%.

    What does this mean for your mortgage, or other debts?

    As you’re likely aware, the BOC interest rate affects all forms of unsecured debt. This can include the amount you owe on your credit cards, unsecured lines of credit, variable-rate mortgages, or any other forms of debt with a changing interest rate.

    Even if you have a debt with a fixed rate, such as fixed-rate mortgage or a fixed-rate loan, if you have a renewal coming up, the increasing interest rates might mean that your lender will renew your debt at a higher rate.

    Although Canadian interest rates are staying steady for now, it’s still important that you look at the overall picture. Consider the following:

    1. Don’t Rush into Too-Good-To-Be-True Deals

    Recently, some Big 6 banks have been offering heavy discounts on variable-rate mortgages. To recap, a variable-rate mortgage is one that changes with interest rates. If interest rates go down, your mortgage goes down. But if interest rates go up, your mortgage goes up.

    If you’re shopping for a mortgage, you’re up for a mortgage renewal, or you’re considering mortgage refinancing, these deals can look very tempting. But you need to consider the rest of the implications. If interest rates increase, as they are predicted to do, could you afford the hike? How much other debt do you carry and how would that be affected by an increase? You need to assess all the variables.

    A variable-rate mortgage could still be the best choice for you, but make sure you are comparing it to a fixed-rate mortgage and understanding that there is a greater chance of a variable-rate mortgage becoming unaffordable.

    1. Make a Plan for Your Debt

    The good news about the BOC keeping interest rates at 1.25% is that you have more time to pay down existing unsecured debt before rates increase again. So, if you haven’t yet made a plan to deal with your debt, now is the time to do so.

    Look into your debt consolidation options. It might be in your best interest to consolidate your debts into one fixed, monthly payment. This way your payment rates will remain the same no matter what happens with the interest rates, and your debt won’t rise any higher.

    1. Be Extremely Cautious About Taking on New Debt

    These interest rate increases aren’t going anywhere. In fact, this is just the beginning. The BOC has stated they still feel interest rates need to be higher. One of the reasons they kept interest rates low for so long was because Canadians needed to spend money to fuel the economy. Lower interest rates encouraged more Canadians to take out more loans, put more on credit cards, etc. But now the economy is relying less on consumer spending, which means that it will get more expensive to take out new debt and more expensive to pay back existing debt.

    If there’s a debt you’ve been considering taking out, really ask yourself if you can afford it. Take a look at your whole financial picture. Now might not be the right time to look into a new line of credit or to open up a new credit card. If you are already living paycheque to paycheque and making ends meet through loans, adding more debt is likely to only make the situation worse, especially as interest rates rise.

    Don’t wait until the next BOC interest rate increase to get your debt under control. Whether you’re affected by Canadian mortgage rates, interest rates, or just want to understand your financial picture, DebtCare Canada can help.

    We offer debt relief solutions, financing programs for loans and mortgages, and much more.

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

     

  • Your 2018 Debt Consolidation Options

    As Canada’s household debt continues to rise, many Canadians are looking at debt consolidation options. Rising interest rates and new mortgage rules are leaving less room for debt and those who once had a comfortable cushion may now find themselves struggling.

    If you’re finding yourself in a position where your debt is becoming unmanageable, or you want to be proactive and pay it down before it becomes so, here are your 2018 debt consolidation options you may want to consider:

    1. Home Equity Loans

    If you have equity available in your home, you may be eligible for a home equity loan. This can be a viable option, so long as the interest is low. You can use the loan to pay off your higher-interest debts and then repay your home equity loan in single, monthly payments. However, home equity loans often depend on your credit score and the interest can be high.

    1. Lines of Credit

    A line of credit is similar to a home equity loan, only you don’t need to own a home. A line of credit can also help with your debt consolidation, but it can come at price. Many will cost you 8% interest or higher, meaning you’ll be able to pay down debt, but repaying your line of credit will cost you. You also need to have good credit. If you have bad credit or owe a lot of debt, this may not be the answer for you.

    1. Mortgage Refinancing for First Mortgage or Second Mortgage

    Both mortgage refinancing or a second mortgage are great options if you have a lot of debt and sufficient equity. However, your credit often needs to be good and if you’re carrying too much debt, you may not be eligible.

    1. Consumer Proposal

    If your debt is excessive, you may be able to manage it through filing a consumer proposal. An offer is made to your creditors to repay a portion of what you owe in lieu of the whole payment. However, filing a consumer proposal can majorly affect your credit score making it extremely difficult to qualify for any type of credit years after the fact. A consumer proposal must also be filed through a Licensed Insolvency Trustee (LIT, or formerly known as a bankruptcy trustee) who takes a portion of what you pay.

    1. Bankruptcy

    Filing for bankruptcy leaves you with only one monthly payment, stops interest and collection action, and reduces debt. However, like with a consumer proposal, it also majorly affects your credit. It must also be filed through a LIT.

    A seasoned financial professional experienced in all of the above is your best bet to get professional financial guidance. Not only can DebtCare Canada work through the debt consolidation options, but they can also liaise and arrange the solution.

    At DebtCare, we deal with debt. A debt consolidation may just be the answer you’re looking for when it comes to getting rid of debt.

    Call us today at 1-888-890-0888.

  • Debt Consolidation Before or After the Holidays: When is the Right Time to Consolidate?

    shutterstock_524105263-1The holidays are fast approaching, and for many Canadian families, that means several weeks of juggling finances and using credit to finance holiday spending. This usually leads to financial stress, which can really put a damper on the seasonal festivities. This year, get a head start with a debt consolidation.

    When is the right time to consolidate? It is always best to start the New Year on fresh footing. If 2016 was a year where you accumulated a lot of debt, there are solutions – these solutions vary depending on the amount of debt you have and your personal circumstances. Know that any number of these solutions can help you deal with that stress from holiday spending.

    What options are available?

    Many people choose to use their home equity to refinance a first mortgage or take out a second mortgage to consolidate debt. This can provide a low monthly payment and involve interest rates far lower than what you are likely paying for credit cards. This is a very viable option that won’t have an overall negative impact on your credit score.

    What if you don’t have a home, or own a home but have no equity and are struggling to manage your payments? Or, what if you don’t have the credit necessary to obtain a traditional loan from a financial institution for a regular debt consolidation?

    Another option to consolidate debt is a consumer proposal. While a consumer proposal is not a traditional debt consolidation and does badly impact your credit score, it does involve a single, monthly payment that covers all of your debts (excluding your mortgage).

    In a consumer proposal, a settlement is negotiated with your creditors. If the majority of your creditors accept the settlement, there are many benefits:

    • A single, monthly payment and prefixed repayment term
    • Interest stops
    • In many cases your debt is reduced and your monthly payment is far less than what you were paying to your creditors
    • If your creditors have commenced enforcement action against you, such as freezing your bank account or garnishing your wages – this action will stop as soon as the proposal has been signed

    It can be difficult when facing financial challenges to know the right solution. A debt consolidation – whether through traditional channels or through a consumer proposal – is a great way to get things sorted out.

    The best thing you can do is work with a financial consultant who is independent and represents you. They can look at all of your financial information, present options and negotiate the solution that best suits your unique situation.

    At DebtCare, we can sit with you and discuss all of your options. Don’t let holiday spending stress you out. Get your finances figured out before the New Year and start 2017 off on the right foot.

    Get in touch today by calling 1-888-890-0888.

     

  • Consumer Proposal or Debt Consolidation – Which Makes More Sense?

    rsz_consumer_proposal_debt_consolidationIn our experience, for those looking to get rid of their debt, there is often a lot of confusion surrounding the various options available. With so many different types of debt solutions available, it can be difficult to determine which option is the best. Today, in the hopes of providing some clarification, we discuss two such options: the consumer proposal and debt consolidation.

    A consumer proposal is a negotiated settlement with your creditors. This means that you offer to repay a portion of your debts and your creditors agree in order to receive at least a portion of what is owed. There are several benefits to this option. In a consumer proposal, all debt is consolidated into a single, monthly payment, there is no interest and often the debt is reduced.  The downside here is that your credit will be impacted. That being said, if you are in a position to seek a consumer proposal, your credit has probably already been affected.

    With a debt consolidation, you borrow money to pay off all of your debt. You then repay whomever loaned you the money, with interest, with a single, monthly payment. For example, many people choose to leverage their homes by refinancing their first mortgage or taking out a second mortgage to consolidate debt. With a debt consolidation, the monthly payment will usually be larger than it would be in a consumer proposal (since you are paying back all of what is owed as well as interest), but your credit is less negatively impacted.

    Which option is best? We can’t accurately answer that question here. Every person’s situation is unique and your personal circumstances will dictate which option is best for you.

    Buyer beware – when you’re struggling with financial decisions such as these, it is best to speak with a financial consultant for guidance to eliminate potential issues.  Remember, if you go to a bankruptcy trustee, they will usually offer up a consumer proposal as the best answer because that is what they sell. If you go to a bank, they will offer a traditional consolidation because that is what they sell. A financial consultant can advise you on the best option and negotiate the process for you. There is nothing being sold, so the bias just is not there.

    At DebtCare, our goal is to help you get out of debt – that could mean a debt consolidation, a consumer proposal or any number of other options. Our priority is your financial security.

    Get in touch today by calling 1-888-890-0888.

     

  • The Low Interest Credit Hunt– Your House is Likely the Fastest Way There

    debt22015 was not the year for many big businesses. Sinking prices for oil and other commodities took a big bite out of national income, business investment and domestic demand – and gross domestic product rose just 1.2 % in the year. Last year’s economic growth was pretty dismal – some even suggesting 2015 experienced a slight recession – and that usually doesn’t mean anything good. However, when it comes to your own hunt for low interest credit rates, it actually works in your favour.

    According to the Globe and Mail, Canada’s growth was the lowest since 2009: “Canada’s oil-battered economy in 2015 grew at less than half the pace of 2014, Statistics Canada reported, as a return to sluggish growth in the fourth quarter punctuated a disappointing year.”

    You can read more about how we entered 2016 here: http://www.theglobeandmail.com/report-on-business/economy/growth/canadian-economy-grows-at-better-than-expected-pace-in-fourth-quarter/article28962744/.

    So, we mentioned favourable results for you, but what does this have to do with your low interest credit hunt? These events triggered another: the Bank of Canada dropped interest rates to historic lows, and Canadians began using record low interest rates to finance.

    Right now, Canada’s lending rate is sitting at .5% – but this is an historic low that won’t last forever. If you are looking for low interest credit, these rates present the best opportunity to deal with things you want to finance.

    The lowest interest credit you will likely encounter will be through a mortgage. If you own your home, it makes sense to use equity to finance things like debt while rates are so low. These low interest rates can save a ton in the long run.

    In an effort to temper hot markets which some claim are inflated, this low interest rate was also accompanied by new CMHC mortgage rules, such as reducing the amounts of mortgages you can insure, reducing allowable repayment amortizations and most recently requiring larger down payments on purchases of more than $500,000. See here for more on these rules: http://www.cbc.ca/news/business/new-mortgage-rules-down-payment-1.3440797.

    If you are looking to finance, whether as a means of debt consolidation or to take on some much needed/wanted projects, now is the time to take advantage of great low rates before they go up or the government institutes more rules that make it harder to borrow.

    DebtCare has the financial options that let you take advantage and clear up your finances.

    Call us today for a consultation: 1 (888) 890-0888.

     

  • A No or Low Interest Consolidation is the Only Type of Viable Debt Consolidation

    debt2People call us all the time and tell us that they would love to pay down their debt or get rid of it altogether, but they are not quite sure of the best way to do it or even where to start. There really isn’t any one ‘best way’ that works perfectly for everyone – the best way for you depends on your situation and goals. That being said, a no or low interest consolidation is often the only viable type of consolidation.

    When you are thinking about debt consolidation to get rid of debt, here are a few of the types you may be considering:

    • Regular credit cards. This works…almost never. Why? Because credit cards are high interest – usually the highest interest of any type of consolidation product – and since debt consolidations often deal specifically with credit card debt, this option kind of defeats the purpose, no? 12% to 30% monthly compound interest makes them the most difficult to pay down, and even though using a credit card to consolidate can mean just one monthly payment, if the payment is all interest, you really are not making any inroads as far as paying off the debt.
    • Lines of credit. Although lines of credit are a popular debt consolidation option, unsecured lines of credit will often run at 8%+ interest. While this makes them less difficult to pay down, they are still not the cheapest option.
    • Home equity loans. If you have equity, these can represent a viable option, as long as the interest is low. They are easier to pay off as well. That being said, they will often run at 2% above prime or upwards, depending on credit.
    • Consumer proposals. If you don’t have equity, or have a poor credit report that makes getting any real credit an issue, these can be a great way to consolidate debt. There is no interest, often a lower balance to be repaid, and one affordable monthly payment. The trade-off is that there are implications to credit, but this option will probably result in the lowest payment and is often the best answer for people who can’t reasonably pay off their debt.

    The only way to explore all of your options for debt consolidation is to work with a company that can address any and all that are open to you.

    At DebtCare, we deal with debt. A debt consolidation may just be the answer you’re looking for when it comes to getting rid of debt. Call us today at 1-888-890-0888.