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Tag: debt consultants

  • Beware of Toronto Debt Consultants – What You Need to Know

    debt3Toronto debt consultants are great because they can help you get out of debt and get in between you and the trustees and banks to help you negotiate the best deal when financially restructuring. What is important to note, however, is that there are different types of debt consultants – and not all are created equal.

    As with any industry, you have to take care when vetting a service provider. Here is a checklist of things you can do to ensure that you are dealing with the right debt consultant.

    Start by questioning how you know about them? Did you see an advertisement for their services on a telephone pole, promising services for low rates and a really quick turnaround? It may be best to rethink that particular company as your ‘go-to’ solution.

    Google them. Do they come up? A reliable debt consultant will have a webpage that should come up on Google. If you can’t find anything, this is probably a good indication that their services are not up to par with some of their competitors.

    Look at their website. Does it look homemade or does it look as though they’ve spent time and resources building an attractive, engaging medium for customers to get a feel for their business?

    Look for reviews. Do they have any? Online reviews have become one of the best ways for customers to scope out potential service providers, so make use of them. A company that allows reviews to be posted offers transparency – they are not trying to hide anything.

    Check social media. How many followers does the company have? A well-respected, long-standing company will have well established social networks that boast a good following. This also suggests the company provides value over social media, something to take advantage of.

    Do they have an office you can go to? The ability to stop by and speak directly with your consultant is a great way to gain a better understanding and create a relationship built on trust.

    Most important: if they ask for money up front – run!! A reputable company should be able to recommend a service, solution and price before asking you for a deposit. Any company that requires full payment up front is likely scamming, so be very careful.

    There are many reliable Toronto debt consultants out there, but unfortunately there are also some less than savory ones too. It is the latter group that you need to watch out for, so use these indicators to better investigate those companies you hope will meet your financial needs.

    At DebtCare, we pride ourselves on being experienced and respected in the industry.

    Call us today to find out more about how we can help you. 1-888-890-0888.

     

  • Dealing with Debt Part 3 – Divorce Debt in Canada

    Canada has the 8th highest divorce rate in the world. Human Resources Development Canada has reported that the proportion of marriages expected to end in divorce has fluctuated between 35% and 42% in recent years. In 2008, 40.7% of marriages were expected to end in divorce before the 30th wedding anniversary. In 2008, there were 70,226 divorces in Canada or 2.11 divorces per 1,000 people.

    Divorce debt in Canada is also very common. Human Resources Development Canada also reported that in 2008, 115,789 Canadians were unable to repay their debts. Serious financial difficulties brought them to file either a consumer proposal or a bankruptcy. Individuals who were divorced or separated were more likely to file a proposal or bankruptcy.

    Why is divorce debt one of the leading causes on bankruptcy in Canada? The answer is fairly simple. First, two income households will often accumulate debt based on their “household ability to pay the debt”. The challenge with this is that debt is accumulated based on two people sharing living expenses and when people separate, living expenses will double because now each party has to pay for rent or a mortgage, and living expenses separately. When household debt is present this can make it challenging to pay it.

    Second, some marriages will involve one person working and one person raising the family. When divorce occurs, the party who hasn’t worked will likely have little to no income but be faced with the immediate expense of having to hire a lawyer and also live. In many cases this forces the party who has been home raising the family back into the workforce. Individuals who have been out of the workforce for a long time often have to re-enter the workforce in junior or entry level positions.

    Third, sometimes one party in a marriage may carry all of the debt in his or her name. Much of the debt may have been used by the other spouse. There is nothing worse than getting a divorce and then finding yourself having to pay your spouse’s debt.

    Legal protections may result in the party who has the weaker financial positioning receiving support payments, being awarded the house, having the other party take responsibility for the debt, but this can take years. Also, the legal fees that compound over the course of a divorce may end up being more than the debt you owed to begin with.

    So how can someone in Canada who has divorce debt keep his or her head above water without filing for bankruptcy? Fortunately, if you are in this situation there is a solution and believe me you are not alone. There are financial programs for people dealing with debt and specifically dealing with divorce debt in Canada. These programs will often enable you to make a satisfactory arrangement with your creditors and will enable you to consolidate your debt payments into a single reduced monthly payment. These programs can be found through debt consultants who specialize in divorce debt in Canada.

    It is important if you are dealing with divorce debt to make responsible decisions that protect yourself and your family and also consider both your short term circumstances and long term goals.

    For more information about dealing with debt or to get help with divorce debt in Canada please visit www.debtcare.ca or call 416-907-2582.

  • Dealing with Debt Part 2 – Gambling Debt in Canada

    Gambling debt in Canada is an epidemic not unlike the Flu. If you have a gambling debt in Canada, don’t get down on yourself. Addiction is an illness and gambling is something that is highly addictive. Casinos are more accessible than ever in Canada and the euphoria that is felt when you win can cause what would seem like harmless entertainment to turn into a serious life altering addiction.

    Many people realize that they have a problem when gambling habits lead to disruption in major parts of their lives. Financially, problem gambling can lead to a loss of income, potential loss of assets, lowered standard of living, or even a loss of employment. Personally, problem gambling can cause conflict with loved ones, and can lead to alienation from family and friends.

    Problem gambling can also impact your health. You can experience a number of health effects, including high blood pressure, digestive problems, stress and anxiety, depression and suicidal thoughts.

    CTV News recently reported on a study from Statistics Canada that showed that wealthier people, on average, spend more money on wagering, but gamblers who have less money spend a larger percentage of their income on gaming activities.

    According to the CTV report, Statistics Canada says that 6.3 percent of people are thought to be “at risk gamblers and problem gamblers.” Problem gamblers make up 0.6 percent of the Canadian population which is roughly 180,000 people. The Statistics Canada definition of a problem gambler is someone who has experienced negative consequences of gaming and who gambles more than five times a year.

    People who gamble responsibly:

    ·         Do so for entertainment rather than income.

    ·         Balance their participation with other activities.

    ·         Do not gamble alone.

    ·         Accept losses as the cost of the entertainment.

    ·         Set a realistic budget and stick to it.

    ·         Don’t borrow money to gamble.

    ·         Set a time limit for gambling.

    ·         Take breaks from gambling.

    If you have gone into debt in order to gamble you have a problem and you have to stand up against it. You are truly putting yourself in a position where you could lose everything, if it hasn’t happened already. There is a lot of support for people who have gambling debt in Canada. This support assists gamblers to deal with their addictions and the debt that they have accumulated as a result of the addiction.

    Some steps that you can take are to join a support group like Gamblers Anonymous, consider excluding yourself from gambling using the Responsible Gaming Commissions self-exclusion tool and seek professional financial guidance immediately. Do not transfer assets in the names of loved ones or borrow more money on top of the money you may already owe. There are many financial programs available that help gamblers who are dealing with a gambling debt in Canada and you can access these programs though debt consultants who are skilled at dealing with situations like the one you may be in now.

    If you are dealing with debt because of gambling you are not alone! Tens of thousands of Canadians are in your shoes and there is hope.

  • 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

  • What is a Trustee?

    What is a trustee? A trustee is a person who holds property, authority, or a position of trust or responsibility for the benefit of another. In the case of an “estate trustee” the trustee could be a company or an individual. An estate trustee in the case of an individual who dies or is incapacitated,  represents the deceased or the incapacitated individual.

    There are other types of trustees though in specific matters that have different responsibilities and are appointed by the government to administer an estate according to legislation.

    What is a trustee in bankruptcy? In Canada, a trustee in bankruptcy is an individual or a corporation licensed by the Superintendent of Bankruptcy to hold in trust and, subsequently, to distribute bankrupt’s property among the creditors in accordance with the Bankruptcy and Insolvency Act (BIA). The bankrupt and all other persons holding the bankrupt’s property must transfer the property to trustee until he or she can determined how the estate shall be administered. “Property” includes income and assets. The trustee may also assist individual in preparing and submitting a consumer proposal to creditors.

    Where an “estate” trustee would act to carry out the intent of the deceased or in the best interest of the incapacitated individual, a “bankruptcy” trustee acts in the best interest of the bankrupts creditors and it is his or her obligation to recover as much money from the estate as possible for the benefit of the creditors.

    In Canada, consumers and businesses often find themselves confused, pondering the question “what is a trustee?” and many get the impression that the trustee in bankruptcy represents their best interests. This is because so many trustees aggressively advertise to people who have financial problems. They do this because they aren’t profitable unless they have individuals and businesses approaching them to file for bankruptcy or to file consumer proposals. These advertisements often promote debt solutions, debt settlements and debt help. When you visit the trustee he or she will often only offer one of two choices: a bankruptcy or a consumer proposal. Inevitably the question is who does the “debt solution” benefit in the end?

    In the case of a bankruptcy the trustee is paid a “tariff” a “fee” from the proceeds of the bankrupt estate. In the case of a consumer proposal the trustee receives remuneration based on a percentage of the amount of the consumer proposal that he or she negotiates.

    When you visit the trustee he or she will require that you provide complete disclosure of your income and assets. If the trustee determines that a consumer proposal is the only legal remedy to your debt, he or she will then determine the amount of the consumer proposal based on your ability to make monthly payments over 4-5 years. For example, if you owe $20,000 and the trustee determines that you can afford to repay your creditors at 100 cents on the dollar, on a monthly basis over 5 years then the amount of the consumer proposal will be $20,000, 100% of the debt owed. If the bankruptcy trustee determined that you can only afford to repay $13,000 over 5 years then your consumer proposal would be 65% of the debt owed. The challenge is that the smaller the consumer proposal, the less remuneration to the trustee, which provides an incentive to the trustee to arrange larger proposals. In addition and as we mentioned earlier the trustee is required by law to secure the greatest amount of repayment possible for the benefit of your creditors.

    It is for this reason that approaching a trustee directly to discuss your debt can be a risky proposition. In the past 5 years, this has spawned new industry: debt consulting. Debt consultants are familiar with the BIA and are able to evaluate your estate to help you determine which option is right for you and they can even negotiate on your behalf with bankruptcy trustees.

    This provides the insolvent person or debtor with a number of benefits.

    1.      Because the debt consultant is hired by the debtor, he or she represents the debtor`s best interests, not the creditors.

    2.      The debt consultant can interpret financial information and often negotiate a better deal than the consumer or business would have achieved had they visited the trustee directly.

    3.      The debt consultant can request evaluations of assets like homes and vehicles to ensure that the trustee does not over-estimate an asset resulting in you paying more in a consumer proposal or bankruptcy.

    4.      The debt consultant can work with you to come up with a financial plan to rebuild your credit and finances after a bankruptcy or a proposal.

    A bankruptcy or proposal offers many benefits and can provide a person who has a financial problem with immediate debt relief, including stopping collection action like a wage garnishment. Like anything else, researching a solution to a financial problem is truly “buyer beware” and if you are considering an avenue for debt relief like a bankruptcy or consumer proposal, we do not recommend that you do so unrepresented.

    For more information about a trustee in bankruptcy or if you are struggling with a financial problem please visit www.debtcare.ca or contact Michael Goldenberg at DebtCare Canada by calling 416 907-2582 for more information.