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Tag: debt reduction

  • Canadian Tax Consultants: Do You Have a Debt Relief Partner to Support Your Tax Clients Who are in Trouble?

    It is not uncommon to find out that your client is facing financial troubles – particularly during the time of a global pandemic.

    In fact, many independent professionals and tax specialists including personal tax accountants, tax preparers, bookkeepers, financial advisors, lawyers, and estate planners are amongst the first to learn that their client is facing financial turmoil.

    It can be a challenging situation when you are preparing a client’s books and your client reveals that they have a huge debt and no means to pay it off.

    Or, when your client is being audited and you know that the outcome will not be favourable.

    Where the CRA collections team is involved, the situation can get trickier. The CRA is relentless and when your client tries to manage their problem on their own – it can make matters worse.

    For instance, the CRA will look for financial disclosure that may lead your client to disclose where they work as well as their bank and asset details. Perhaps the CRA accepts a temporary arrangement – but the moment it is up, they can move forward with wage garnishments, freezing of bank accounts, and liens on the property.

    Today, an average Canadian owes $1.58 per dollar of disposable income.

    This debt is likely to increase when mortgage deferrals end, the government’s relief measures are withdrawn, and the CRA’s collection action resumes.

    This is the calm before a massive storm – would you agree?

    This is why it is great to have a partner in your corner who can independently represent your client and work with them to resolve their financial challenges.

    By providing your clients access to debt consolidation programs and opportunities for debt reduction, you are not only helping them navigate their financial challenges but are also strengthening your long-term relationships.

    This same level of service may not be received if you send your client to a trustee, this is because they offer insolvency as their service and your client will be counselled on that basis.

    Similarly, if you send your client to a bad credit lender who only offers high-interest products or a mortgage broker who only arranges mortgages, your client will only receive advice in those specific areas.

    At DebtCare, we provide access to many financial options and debt consolidation programs. We take on a consultatory role where the client pays for our consultation and after working with their financial profile, we guide them down the best path.

    This includes aligning all professionals that will be needed. Whether it is securing financing from a lender or working with a trustee to facilitate a consumer proposal, we can help.

    To learn more about our services for Canadian tax consultants, call or text us on 1-888-890-0888 or visit www.debtcare.ca.

     

  • 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.

  • Prepare for the Coming Holidays with a Debt Reduction Plan that Works!

    Debt ReductionWith the holidays quickly approaching, the dollar signs may quickly begin to add up – this time of year never fails to leave the wallet feeling just a tad lighter. When you are in debt, the excitement brought on by this time of year can rapidly be overshadowed by the stress that comes with having to spend when sometimes spending isn’t the best idea for your bank account. In the spirit of giving, here are some pre-holiday debt reduction tips that may just help you ease that stress and allow you to enjoy the season.

    1. Stop avoiding. Just because you ignore that fact that you have debt doesn’t mean it isn’t there – and avoiding it is not going to make it magically disappear – if anything this will just tempt you to continue spending. Be proactive and admit that you need to get on top of your debt reduction plan.
    2. Establish a debt reduction plan. Yes, you need to sit down and think about your financial goals for the next year, 2 years and 5 years. Getting rid of debt in a month is not feasible for most individuals, so don’t be unrealistic. However, jumping in head first without a plan may just leave you worse off than when you started.
    3. Set a budget – for both monthly spending and holiday spending. Monthly – again, be realistic, but starting a budget may mean cutting out some luxuries that are not really necessary. For example, you may not need to eat out or order in dinner once a week, but be realistic – don’t cut it out altogether. With holiday spending, set maximums. Maybe it means doing a gift exchange by drawing names, rather than buying something for everyone.
    4. Stop using the cards. This may be difficult, but remember, if you can’t pay cash you really can’t afford it. Stop purchasing on credit if you can avoid it. Since it is likely this spending that got you into trouble to begin with, quit it.
    5. Seek out debt help. You don’t have to do it alone. One of the best ways to get your finances back on track is to seek out the assistance of a professional, someone who can work through all of the roadblocks and speed-bumps and help you on a path to becoming financially fit. The solutions may include things like credit counselling, consolidation, or a consumer proposal or bankruptcy – it will depend on your own unique financial situation.

    When you are in debt and feel like there is no light at the end of the tunnel, just remember: getting out of debt may take time, but it is possible. Use these tips to help ease the stress caused by debt and take back control of your money.

    For more tips on developing a debt reduction plan before the holidays get underway please contact DebtCare Canada at 1-888-890-0888 or visit www.debtcare.ca.

  • Getting Out of Debt Blog Series #4: Debt Settlement

    Getting Out of Debt

    With the average consumer debt load in Canada at an all-time high, it is unfortunately not surprising to see companies popping up everywhere offering solutions to your debt problems through a debt settlement. But be wary; unlike consumer proposals, bankruptcies and debt consolidations, debt settlements, depending on the company, can sometimes come with more negatives than positives. This 4th blog in our ‘getting out of debt blog series’ looks at the debt settlement, giving you the information you need to help you make the right decision about solutions to your debt problems.

    What is a debt settlement? A debt settlement is just that – the settlement of your debts. This settlement involves a negotiation with your creditors to reduce the amount of the debt you are required to pay off.

    A debt settlement will in almost all cases involve paying the settlement amount in a single instance. In most cases the collection agency representing your creditor can accept less money from you than you owe to settle your debt. We have seen collection agencies settle debt for as little as 50% of the amount that was owed. That being said, regardless of whether it is the collection agency or a creditor that is willing to consider a debt settlement, they will want to receive the settlement money in full.

    Often consumers won’t have the money to pay the settlement in full. This has spawned an entire industry of debt reduction companies. These companies will accept monthly installments from you over time with the promise that once you have remitted enough money they will settle your debts. This is a risky proposition. Instead, do your due diligence because if you are remitting to a debt reduction company and they go out of business in the future your money may not be secured.

    There are several reputable companies out there that offer financial consulting and can help you to settle debt with your creditors without risk to you. These companies, experienced with consumer debt solutions, will represent you fairly and help you establish a plan to settle your debts without you giving money to them on a monthly basis.

    Avoid being taken advantage of by doing research and avoiding companies who bill themselves as debt reduction specialists or companies. Look for positive reviews from consumers and see how much of an online image they have established to ensure that you are working with a professional organization that has staying power.

    How will a debt settlement affect your credit? As with any debt solution, a debt settlement is recorded on your credit report and may bring down your score. That being said, if you are considering debt settlement the impact on your credit rating is likely no worse than the damage already done. Once you have settled your past bad debt you can begin the process of rebuilding.

    If you are considering a debt settlement as a way of getting rid of your debt, there are a number of things to consider, but the most important is the company itself. Just because a company promises to settle your debts it doesn’t mean that they will do so the right way. Make sure that you do your research and make inquiries. Working with a trustworthy debt settlement company will make all the difference, keeping you protected throughout the process.

    If you need help getting out of debt or would like to find out more about your debt settlement options, please contact DebtCare Canada today by calling 1-800-890-0888.

  • Canada Day: Are You Sticking to Your Debt Reduction Strategies?

    debt reductionHappy Canada Day everyone! July 1st marks the half-way point of the year, and it is time to look back at the last six months and see how well you have managed thus far to stick to your New Year’s resolution. If you, like so many other Canadians, made a resolution involving your personal debt reduction but seem to be falling behind, you may not actually like this glance back. But don’t worry, according to a recent survey done by PricewaterhouseCoopers, you are not alone.

    An article on this survey released by CBC News reports that 63% of survey respondents said that their financial goals for 2013 included significant debt reduction. However, less than 25% of those had actually managed to achieve this goal, while 26% said that they had been completely unsuccessful.  Economists continue to report on the status of Canadian debt levels, trying to hammer home the importance of personal debt reduction and adopting debt reduction strategies, but it seems as though Canadians across the nation are having a much harder time actually making these strategies work for them.

    If you are reading this and find yourself in the 26% range, having had no significant victory over your current debt load over the first half of 2013, it might be time to think about an alternative debt reduction plan that will actually work.

    A debt reduction company likely isn’t the answer. Debt reduction companies will often have you made a monthly payment to them over an extended period of time with a promise that when enough money is received they will settle your debts. One problem though – what happens if they go out of business? What security do you have that your money is secure? Also, a debt reduction company that offers a service will be motivated to push their product.

    A financial consulting company, hired by you to represent you, can present you with all of your financial options. This could include debt reduction through settlements or through a consumer proposal. It could also mean a debt consolidation – your debt reduction solution will largely depend on your personal circumstances. Pay attention to marketing by debt reduction companies. A debt reduction company that says they ‘will’ reduce your debt by 80% for example is different from a financial consulting company who says that they ‘may’ be able to reduce your debt. No company can make a guarantee without knowing your individual circumstances.

    What types of strategies exist? Well, as we mentioned, one is a consumer proposal. This is by no means the only approach. However, if you are drowning in debt and are only able to make your minimum monthly payments, or worse, not even these, this solution might be the best choice. Debt consolidation might be another solution to reduce your monthly payments by consolidating debt into a single monthly payment. Whatever your situation, exploring all of your options is the best way to reach a positive outcome.

    If you want to actually achieve your New Year’s resolution and take control of your debt, you don’t have to do it alone. A good financial consultant can provide you with the help you need to get control of your finances.

    For more information about debt reduction strategies that will actually help you reduce your debt, please contact DebtCare Canada by calling 1-800-890-0888 or visit www.debtcare.ca.

  • Get Out of Debt Canada

    Even though the economy seems to be rebounding, the average Canadian household debt load continues to grow. People across the country are still relying heavily on credit for a great number of their normal purchases, and many are finding it harder and harder to pull themselves out of this dangerous cycle.

    The stats on Canadian debt are unprecedented. A recent report from the CBC stated that the average unsecured consumer debt load jumped 4.6 percent in the third quarter of 2012 – the average amount being $26,768. The debt to income ratio has jumped from 140 to 165 percent. For Canadians, the trend seems to be one of continued reliance on credit to the extent that many are opting to up limits and increase borrowing.

    This trend is becoming more and more problematic for those Canadians unable to meet minimum monthly payments. If monthly financial responsibilities exceed income, the results can be disastrous. This is why it has become increasingly important to get out of debt and take back control of your finances.

    An important thing to remember when you are thinking about how to get out of debt is that you don’t have to do it by yourself. The influx of companies offering debt reduction services is evidence of this. Many Canadians are turning to these companies to get out of debt. It is important though, even with new regulations being put in place, to make sure that the company you choose is one that has your best interests in mind.

    A good financial consultant is a great option for a number of reasons. An experienced, well-reputed financial consulting company can offer you solutions to get out of debt the right way. By offering you budgeting advice alongside various methods to get out of debt, a debt reduction company can give you the help that you need to get rid of your debt.

    Many Canadians worry that bankruptcy is the only option when drowning in debt – it isn’t. Instead, debt consolidation is a great solution for many Canadians, as is entering into a consumer proposal. Consolidating your various monthly payments into one, easily managed payment not only makes it easier to pay, but this can also reduce the interest. A consumer proposal, if accepted, can reduce your debt substantially, making it far easier to get out of debt much more quickly.

    Don’t keep ignoring your financial problems to the point that they take over your life. Instead, talk to a good financial consultant who can present the options available to help you get out of debt – before it is too late.

    It is time to get out of debt Canada. For more information about how to deal with your debt, please contact DebtCare Canada today by calling 888-890-0888 or visit www.debtcare.ca.

  • Debt Settlement Companies to be Regulated in Ontario

    After regulating industries like the collection industry and payday loans industry, Ontario is making a responsible move and will also be regulating debt settlement companies.

    Ontario made this announcement in January 2013. This regulation comes on the heels of an explosion of ‘debt reduction’ companies that charge up-front fees and will even collect money from consumers with the promise of settling debts in the future.

    The Ontario Government’s new regulations will include:

    1. Not allowing debt settlement companies to charge up-front fees when negotiating debt settlements.
    2. Limiting the amount that a debt settlement company can charge.
    3. Requiring that debt settlement companies are transparent and provide their clients with clear written agreements.
    4. Allowing a consumer to have a 10 day cooling off period in the event that the individual changes his/her mind.

    The Ontario Government has put out requests for consultation from the public, including from debt settlement companies themselves. We have long advocated for this kind of regulation. As a financial consulting firm committed to helping those Canadians struggling with debt, we have never charged up-front fees or made exaggerated claims to our customers.

    Debt continues to be a rampant problem in Canada with many consumers turning to credit to balance the shortfalls with the ever rising cost of living and transportation in major city centres.

    The idea of regulating debt settlement companies is not restricted to Ontario. It is an idea that is spreading across the country. Stated in the press release issued by the Ontario Government was the fact that Alberta, Manitoba and Nova Scotia have also introduced regulations with respect to debt settlement companies.

    Here are some other sobering facts that the Ontario Government included in their press release:

    1. Average consumer debt in Ontario is up to $25,447 in the second quarter of 2012, compared to $24,721 in the second quarter of 2011.
    2. For every dollar Canadians earn, they have $1.64 in unsecured debt (Statistics Canada).

    These figures substantiate why there are more than 20 debt settlement companies already operating in Ontario. Perhaps while the Ontario Government looks at regulating these 20 debt companies, they should also take a look at reducing the fees and interest rates that credit card, loan and payday loan companies are allowed to charge which often results in consumers needing financial help.

    There are systemic problems in this country and unfortunately the ones who always seem to get the short end of the stick are consumers.

    It is the consumers who are drowning in debt and then finding themselves in the offices of debt settlement companies looking for relief. These are the same consumers who (depending on their choice of debt settlement company) may also end up in a debt reduction program that doesn’t make sense or whose fees are sky high.

    So regulate, regulate, regulate we say! We support any effort on the part of the Ontario Government to see Canadian consumers get fair treatment.

    For more information about debt settlement companies or if you have a debt problem and need help, please call 416-907-2582 or visit www.debtcare.ca.

  • Debt Relief in Canada Blog Series Part 1 – Is a Consumer Proposal the Answer?

    Debt relief in Canada is a subject that is constantly in the news for many reasons, whether it is the government reporting on the fact that Canadians are carrying historically high levels of debt, reporting on debt reduction companies and what to watch out for, reporting on changes to CMHC lending guidelines to stop those who are loaded with debt from buying homes that they really can’t afford, and more…

    Unfortunately, most people who have too much debt don’t realize that they have a problem until managing minimum payments starts to become challenging, resulting in a debt problem turning into a debt emergency. There are many options for debt relief in Canada, but each one is different, and the right one for you will really depend on your own personal circumstances.

    Making a consumer proposal is one option for debt relief in Canada, but the question is: is a consumer proposal the answer?

    A consumer proposal is a type of proposal that is made to your creditors and is administered by a bankruptcy trustee who represents both you and the creditors that are included in your consumer proposal. Consumer proposals are crafted based on your ability to repay your debt realistically. Consumer proposals are repaid monthly, usually over a period of 3-4 years. With that being said, a consumer proposal can be paid off sooner if your financial situation changes. Consumer proposals are removed from your Equifax credit report 3 years from the date that they are paid in full, which provides a further incentive for those who are in a consumer proposal to pay it off early. Because consumer proposals allow you to make a single monthly payment that fits within your budget and enables you to rebuild your credit faster, consumer proposals are a very popular option for debt relief in Canada.

    Since consumer proposals are based on your ability to make a monthly payment and not on your total debt load, oftentimes consumers can reduce their overall debt through a consumer proposal. In a simple, very general example, if your total unsecured debt is $20000 and you can afford to pay $200 per/month for 5 years based on your budget and the consumer proposal guidelines, the total value of the consumer proposal would be $12000, meaning you would reduce your debt by $8000. Each case is different, and your consumer proposal must be fair to your creditors as they have a say as to whether or not they will accept it.

    When you make a consumer proposal, your creditors will receive your consumer proposal by mail and have 45 days to respond and vote as to whether they accept or reject your proposal. If a creditor does not respond to the consumer proposal within 45 days, they lose the ability to vote and the proposal is considered accepted. In addition, if the majority of your creditors accept the consumer proposal, it will be approved.

    Consumer proposals are suited to individuals who have higher incomes, as they are subject to surplus income in bankruptcy.  When a consumer has surplus income his or her payment in bankruptcy will be much higher and this is what makes a consumer proposal a more attractive option for a higher income earner. Consumer proposals are also better suited to an individual who has some secured creditors and to someone who has the ability to repay a good portion of his or her debt but simply cannot manage the contractual payments that they currently have with creditors.

    For more information about options for debt relief in Canada or to see if you qualify for a consumer proposal please call DebtCare at 416-903-4000 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