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  • Holiday Financial Planning… Steps to Start 2020 on a Strong Financial Footing

    The holiday season is an expensive time for many! Between gifts, decorations, parties, and travel, the costs (and credit card charges) can quickly add up. To keep your budget and debt in check, holiday financial planning is a must.

    According to PwC Canada, the average Canadian consumer will spend $1,593 during the 2019 season — up 1.9% from 2018. That number increases with the type of shopping consumers choose to do. The average online-only shopper plans to spend $1,053 while the average multi-channel shopper (in-store and online) plans to spend $1,726.

    And that is just on shopping costs alone. This doesn’t factor in travel expenses, décor, food, and beyond.

    Overall, PwC reports, 17% of Canadian consumers are worried about credit card debt. Millennials and Gen Z are even more concerned: 22% and 24% respectively think too much debt might build up.

    Going into the new year with debt — especially high-interest credit card debt — is stressful. You need a plan to pay off your holiday purchases and leave 2019 on better financial footing than you started the year with!

    Holiday financial planning is the key to both preventing overspending during the holidays and making 2020 your most successful financial year yet. Here’s how to go about it.

    Assess Your Budget

    A budget is important for planning your holiday spending. Knowing how much you can afford to spend will help determine what you spend it on!

    • If you have a regular monthly budget, review how much you can realistically set aside for your holiday expenses.
    • If you don’t have a regular monthly budget, review your past month of spending. How much income have you brought in and what savings are left over?
    • Are there any areas in your budget or spending habits you could trim back on for your holiday spending?
    • Decide on the figure you are comfortable spending this season and that you are able to comfortably repay into 2020.

    Plan Your Holiday Spend

    • Make a list of everyone you are shopping for, food-related items, decorations, travel plans, and other expenses you will encounter this season.
    • Estimate how much you plan to spend per list item. Even just the act of doing this can be illuminating!
    • At this point you may see that you have planned for more than is in your budget estimate.

    If you’ve found that you plan to spend more than you can afford, you can try to either reduce what you plan to spend (looking for ways to save money) or you can go back to your budget and look for more wiggle room. To that end…

    Clean Up Your Debt

    One of the biggest hijackers of your budget is debt payments. If you owe money, you know just how much the interest payments alone can take out of your monthly budget. And even if it’s only a little bit, why not use that money for something else?

    Consolidating your debt can free up room in your budget for holiday spending and start you on the right financial footing for the new year. If “get out of debt” is your New Year’s resolution, you’ll already be a step ahead.

    Don’t Finance Your Holiday Spending 

    If you’ve found that you plan to spend more than you have, you might be tempted to make up the difference with financing — credit cards, lines of interest, a payday loan, and so on.

    Don’t do this! If you don’t have the income available now or won’t be able to pay off the expenses in full in the next month, it can create a stressful financial future. While you might profit in the short-term, you’ll have to make up the difference in the long-term. This can lead to lingering debt and credit score issues that you’ll still be trying to fix next holiday season.

    Instead, look for ways to make the holidays great on a budget. Your financial future will thank you!

    DebtCare Canada helps our clients with holiday financial planning, debt consolidation, budget planning, money saving, and more.

    Contact us for a free consultation to set yourself for success during the holidays and beyond. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Affordable Housing in Toronto is Still a Major Problem

    Affordable housing in Toronto has been difficult to find for a while now — but despite hopes that it would get better, it is still a major problem for many.

    A recent report from Zoocasa determined that in the Greater Toronto Area, it would take 32 years for a household earning a median income to save a down payment for a typically-priced home.

    And for those renting instead of buying, affordable housing isn’t much better.

    The Canadian Rental Housing Index recently determined that in 20 Canadian ridings — including some in the Greater Toronto Area such as Willowdale, Thornhill, Richmond Hill, Markham-Unionville, University-Rosedale, and more — at least 25% of renters are spending 50% or more of their income on rent alone.

    At least 48% of renters are spending 30% or more of their income on rent.

    “Housing is typically considered affordable if a household spends less than 30% of its before-tax income on rent plus utilities,” the Index stated.

    See more of the Index results here: http://rentalhousingindex.ca/en/#intro

    With increases to home prices and rental rates, it’s no wonder that it’s getting harder and harder to make ends meet. It’s too expensive to live in the Greater Toronto Area and other major cities, and lenders know it.

    If you are in this situation, what can you do?

    While this is a tough situation to be in, the first thing to do is try to free up room in your budget. If you are using credit to balance the shortfall, you may find that doing away with the debt frees up the cashflow you need to pay rent or save more for a down payment.

    Debt can harm your budget in two ways:

    First, it can get in the way of your cashflow. If you are always making debt payments (like paying off your credit card balance plus interest) you’re spending money you could use elsewhere.

    Second, many lenders use your total debt service ratio (TDS) to determine how much you can afford to borrow — particularly when it comes to a mortgage. In addition, carrying too much debt can hurt your credit score, which makes it harder to be approved for low-interest loans. If you are hoping to get a mortgage in the near future, or renew an existing one, lowering your total debt-to-income ratio will only help.

    While getting out of debt won’t make Toronto’s home and rent prices drop, it can make it easier for you to balance your budget and save money at the same time.

    DebtCare Canada helps Canadians deal with outstanding debt. We’ve helped thousands of people reduce or restructure their debt, repair and rebuild credit, access financial help, and more.

    Contact us today for a free assessment to see how we can help you manage your budget while dealing with the lack of affordable housing in Toronto and the GTA.

    Call 1-888-890-0888 or visit www.debtcare.ca.

  • How to Save Your Home During a Financial Crisis

    In a financial crisis, all of your assets may be in jeopardy – especially your home.

    A financial crisis can take many forms: an unexpected bill, change in interest rates, job loss, buildup of long-term debt, and more. But one of the hardest to deal with — and most critical – is a CRA tax debt.

    When you owe the Canada Revenue Agency (CRA) money, they can act swiftly and aggressively. The CRA has many debt collection tools in their arsenal, including putting a lien on your house.

    Particularly in cases of tax debt, many folks freeze and don’t know what to do.

    This is mistake! When it comes to a financial crisis — especially a tax debt – time is not your friend. A lien on your house is game over.

    When there is a financial crisis, saving your home means acting fast.

    The first step is to determine your home equity position. A good financial advisor will be able to access an automated valuation model (AVM) to calculate the actual quick sale market value of your home against what you owe.

    The next step is knowing ALL of your financial options and considering the pros and cons of each.

    Option 1: Refinancing Your Home

    Pros: Can deal with your financial crisis without affecting your credit score.

    Cons: The viability depends on the equity available in your home. It isn’t always a long-term solution.

    When evaluating refinancing your mortgage, ask:

    • Do you have enough equity in your home to refinance?
    • If you do refinance, is it just a band-aid solution or does it fully resolve the issue?

    Sometimes people will refinance their homes to quickly deal with the issue at hand, but it doesn’t resolve the long-term one. So, a financial crisis is still looming, but they will not have equity to deal with it the next time it becomes urgent.

    If refinancing is not a long-term solution, there are other options available.

    Option 2: Filing for a Consumer Proposal

    Pros: Stops collection action and deals with debt quickly. Payments are geared to income. Your assets are generally not affected.

    Cons: Only available for unsecured debt up to $250,000 (excluding mortgage). Leaves you with an R7 credit rating, meaning you will need to repair credit afterwards.

    In a consumer proposal, you make an offer to your creditors to settle your debts for less than what you owe. The offer must be accepted by the majority of your creditors.

    In most cases, you can keep your home when you file for a consumer proposal, as your assets remain untouched. But this depends on your mortgage payments being kept up to date and whether you have enough income to continue paying your mortgage after the proposal.

    Option 3: Filing for Bankruptcy

    Pros: No limit to the amount of debt you can file for bankruptcy. Like with a consumer proposal, payments are geared to income and collection action is stopped.

    Cons: Leaves you with an R9 credit score. May put your assets at risk, depending on your financial situation.

    In a bankruptcy, assets are often sold to pay off debts – including in some cases your house. However, this doesn’t always happen; you may be able to keep your home depending on the amount of equity you have available.

    If you are considering filing for bankruptcy, talk to a financial advisor about options for keeping your home.

    Filing for a consumer proposal or for bankruptcy can often seem scary. But in a financial crisis, it could be your best option. If there is no lien on your house, both filing for a consumer proposal and bankruptcy could protect your home, depending on your financial situation.

    Plus, both have payments that are geared to your income, so you will be able to afford the monthly fees without getting into another financial crisis.

    One downside to both is the hit to your credit score and the time it can take to rebuild credit. But that can still be a better option than losing your home. A good financial advisor will structure your consumer proposal or bankruptcy based on equity.

    Whether you choose to refinance or are considering filing for a consumer proposal or bankruptcy, it is important to weigh your options carefully but also quickly (as we said, time is of the essence during a financial crisis).

    That means talking with a financial advisor who can look at your whole financial situation and help determine the best course for you.

    At DebtCare Canada we are experienced in evaluating the pros and cons of all options – and doing everything we can to save your home.

    If you’re facing a financial crisis, don’t delay. Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • If I File for a Consumer Proposal Does It Mean I’m Bankrupt?

    If you file for a consumer proposal does it mean you’re bankrupt?

    It’s a common question we receive, but the short answer is NO.

    While both programs are administered under the Insolvency Act, filing for a consumer proposal and filing for bankruptcy are two different things. Filing for a consumer proposal doesn’t mean you’re bankrupt, just as filing for bankruptcy doesn’t mean you’re in a consumer proposal.

    And both have different implications for your credit score.

    When you file for a consumer proposal, you are given an R9 credit rating while in the proposal (this is the worst credit rating you can receive). However, once your proposal is paid off, you are upgraded to an R7.

    The R7 stays on your credit report for three years from completion. So, in three years, your credit will be clean. You can pay off your consumer proposal in anywhere from one month to five years. This could mean your credit score is clean as soon as three years and one month after filing!

    Bankruptcy is a little different. When you file for bankruptcy, you are given an R9 rating that stays on your credit report for seven years after completion. First time bankruptcies can be paid off in nine-to-21 months, so the R9 rating would stay for seven years after that.

    A consumer proposal allows you to rebuild credit faster, particularly if you can pay it off quickly.

    That’s where working with financial counsellors, like DebtCare Canada, comes in. We can help you decide which is best for you — filing for a consumer proposal or filing for bankruptcy — and make sure you are protected along the way.

    We are on your side and will work to secure you the best deal possible in your consumer proposal or bankruptcy.

    If you’re thinking of filing for either, contact us first for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Requirement to Pay – If You Received One, Act Before Life Gets Uncomfortable

    A requirement to pay is one of the most uncomfortable forms of debt collection you can receive.

    A requirement to pay can be:

    • Sent directly to your employer (as a wage garnishment) so your employer will have to send a portion of your paycheque directly to the CRA. This can be embarrassing as now your employer will know you owe a tax debt.
    • Sent directly to your clients if you are self-employed or a sole proprietor. This is embarrassing and can also be damaging to your business if your clients switch to a competitor because they are worried about your financial situation.
    • Sent directly to the bank so the funds will be taken out of your bank account. You will be in for a shock when you go to access your account and find less in there than you expected, which could put you into financial trouble in other areas of your life.

    In any of these situations, a requirement to pay can make your life extremely uncomfortable at best, and at worst can result in long-lasting consequences that affect your reputation, finances, and livelihood.

    The solution? Take action — fast.

    Like any CRA collection action, a requirement to pay can be stopped by:

    • Paying the tax debt in full — however, this may not be an option if you don’t have the money available.
    • Filing for a consumer proposal or bankruptcy.
    • Working with a tax debt counsellor, like DebtCare Canada.

    The worst thing you can do is try to negotiate with the CRA yourself. At best, you will still have to pay the text debt in full and in a timely fashion, and at worst you may reveal information that allows the CRA to issue more requirements to pay.

    The better option is to work with a debt counsellor. For instance, at DebtCare Canada we offer one of the only programs that resolves CRA back taxes, including stopping collection action in its tracks.

    If you’ve received a requirement to pay from another creditor, we can help, too. We will work with you to stop the collection action as quickly as possible so you can avoid costly consequences — both financial and reputation-wise.

    If you’ve received a requirement to pay, don’t wait. Act now.

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

  • CRA Convictions – Yes, People Really are Prosecuted for Filing Taxes Late

    Yes, it’s true — CRA convictions are a real thing and they happen to average people across the country.

    When it comes to filing taxes late, tax debt, and tax evasion, the Canada Revenue Agency (CRA) has many measures at its disposal. This includes collection action — such as wage garnishments, freezing bank accounts, and placing liens on assets — but they can also prosecute when they choose.

    Here are some examples of average, everyday Canadians who ended up with CRA convictions:

    1.     A British Columbia lawyer failed to report $1,284,254.81 of taxable income for the 2005, 2006, 2007, and 2008 tax years. He was sentenced on January 10, 2019 to a 22-month conditional sentence, including eight months of house arrest. He was also fined $418,865.66 after pleading guilty to one count of tax evasion under the Income Tax Act.

    2.     An Ottawa resident was sentenced to a nine-month conditional sentence, including six months of house arrest, and a fine of $68,000 after failing to report net business and rental income totaling $410,148 for the years 2009 to 2013. He was also required to pay the full amount of tax owing, plus related interest and any penalties assessed by the CRA.

    3.     A New Brunswick man pleaded guilty on June 10, 2019 to eight counts of tax evasion under the Income Tax Act. He was sentenced to a fine of $53,959. In addition, he will also have to pay the full amount of tax owing, plus related interest and any penalties assessed by the CRA.

    4.     The CRA seized six rental properties and an automobile belonging to two Ottawa residents charged with tax evasion. They were alleged to have underreported their income by $3,114,100 from January 2008 to December 2013, thereby evading $523,532 in federal income tax. The duo was arrested and then released with court-imposed conditions. 

    5.     A British Columbia land developer and builder was sentenced to pay a $23,100 fine after being found guilty on two counts of tax evasion and one count of making false statements under the Income Tax Act, and one count of GST/HST evasion under the Excise Tax Act.

    According to the CRA, for the five-year period of April 1, 2013 to March 31, 2018, the courts have convicted 307 taxpayers of tax evasion. This involved $134 million in federal tax evaded and court sentences totaling approximately $37 million in court fines and 2,964 months in jail.

    When taxpayers are convicted of tax evasion, they must still repay the full amount of taxes owing, plus interest and any civil penalties assessed by the CRA. In addition, the courts may fine them up to 200% of the taxes evaded and impose a jail term of up to five years.

    Tax evasion can be a slippery slope — you may fear filing taxes late or know you can’t pay, so you don’t file them at all, which can end up leading down an even worse path.

    If you do file taxes late, you may also be subject to CRA interest and late-filing penalties, which can add to the amount you owe.

    But there is a better option than filing late or not filing at all — work with a tax debt expert.

    At DebtCare Canada, we can help you deal with a tax debt situation. If you haven’t filed yet, or have filed but can’t pay, we provide access to one of the only programs that can resolve a CRA back tax problem.

     ·       Often your principal tax debt can be reduced.

    ·       Interest and penalties immediately stop.

    ·       Frozen bank accounts are unfrozen.

    ·       Wage garnishments are lifted.

    ·       Garnishments to customers are lifted.

    ·       You are able to make a single monthly payment.

    And you won’t be subject to CRA convictions!

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

  • Will the Federal Election Save You Financially? What to Expect for Housing Affordability, Financial Help, and More

    The Canadian federal election is coming up — and housing affordability is on every party’s platform.

    According to a survey from Abacus Data, 57% of Canadians polled report that an issue related to cost of living, taxes, housing affordability, wages, or income inequality is the top issue that they feel will determine their vote in the upcoming federal election.

    Source: https://abacusdata.ca/memo-what-our-polling-on-affordability-anxiety-for-the-broadbent-institute-means-for-progressives-in-canada/

    Between student debts, rising rents, and a high cost of living, many would-be homeowners are struggling to even break into the housing market.

    While the federal political parties are gearing up for the election on October 21, 2019, they are unveiling plans to deal with affordable housing, consumer debt, reduce cost of living, and more.

    The Liberal Party of Canada revealed a plan for affordable housing. The Conservative Party leader said he wants to scale back the mortgage stress test. The federal NDP leader promised 500,000 affordable housing units if elected. But is it enough?

    It may depend on the individual situation. Look realistically at your budget – where is your money going? If a large portion is going towards debt payments — credit cards, lines of credit, and more — government measures may not be enough.

    Even with government assistance to make housing more affordable or provide relief, the only thing that can save you financially is doing away with the debt.

    If you are carrying a large amount of high-interest debt, it will make everything more difficult — from securing a loan, to making ends meet, to buying a house.

    Step one is to deal with debt, regardless of which party succeeds in the federal election.

    This will allow you to take advantage of any relief measures that are introduced with a clean slate.

    You might deal with debt by:

    • Credit counselling.
    • Consolidating payments.
    • Securing a second mortgage to pay off high-interest debt.
    • Filing for a consumer proposal or for bankruptcy.
    • And more.

    At DebtCare Canada, we can go through your budget and options to find the best solutions for you. We’ll help you realistically assess your situation and make a plan for your future — no matter who wins the federal election.

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

  • 2 Ways to be Out of Debt Within 5 Years

    When you’re in financial trouble, you want to get out of debt quickly. But finding out how to pay off debt fast can depend on many factors:

    • The amount of debt. If you are carrying a lot of debt, the time to pay it off in full may be longer.
    • How much debt and interest you accumulate along the way. The problem with paying off high-interest debt is that the interest continues to add up. If the debt is high enough, you may only be able to afford the interest payments each month, leaving you still in debt.
    • Your income level. Unless your income level drastically changes, it might be hard to find room in your current budget to truly get out of debt fast without your quality of life suffering.

    Some credit cards can take up to 96 months to pay off in full — the equivalent of eight years! That’s eight years of scrimping and saving and constantly having to think about debt payments. There is a better way.

    In order to get out of debt fast you need a solution that:

    • Is realistic and sustainable. You want this to last for the long-term.
    • Is easy to access. If your credit score is hurt, options may be limited.
    • Avoids high-interest payments or fluctuating interest payments.

    Luckily, there are two solutions that meet all of these requirements and more! Pay off debt quickly — within five years (or sooner!) — with one of these methods:

    1. Second mortgage amortized over five years.

    If you own your home, you may be eligible for a second mortgage. You can amortize this mortgage over five years and then use the equity to pay off your debt in one lump sum. Then, over the next five years, you can pay the second mortgage back in fixed, scheduled payments.

    You will always know what you are paying and when you are paying it. This will allow you to budget wisely and with flexibility.

    1. Filing for a consumer proposal.

    If you don’t own a home, or a second mortgage isn’t an option, filing for a consumer proposal may be the way to go. In a consumer proposal, you make an offer to your creditors to pay your debts for less than you owe. The creditors must feel confident that they are getting more back than they would if you filed for bankruptcy instead.

    Once you are in a consumer proposal, you have five years to pay it off. You can do so sooner if you have the money available. This will allow you to clear your high-interest debts quickly and pay back one monthly payment over a planned, fixed schedule.

    Within five years, you can be debt free and with a lot less stress along the way!

    Interested in exploring your options? DebtCare Canada can help. We provide access to second mortgages, first mortgages, home equity lines of credit, and more to people with all types of financial situations.

    Or, if you’re thinking about filing for a consumer proposal, our financial advisors will make sure you are protected and getting the best deal possible.

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

  • How to Refinance Your Mortgage After You Have Destroyed Your Credit

    You want to refinance your mortgage, but is your credit up to the task?

    A number of things can contribute to a low credit score, a.k.a. bad credit. This includes:

    • Defaulting on a loan or bill payment.
    • Poor payment habits, such as missing due dates or only paying the minimum balance.
    • Accessing too many credit products.
    • And more.

    In some cases, you might have already owned your home before you ran into credit trouble and were able to keep your mortgage payments up to date. Refinancing your mortgage can be a great solution for getting out of debt and dealing with problem credit.

    For instance, if you have equity available and are able to refinance your mortgage and access it, you might be able to use that money to pay off your bad debts.

    Similarly, if your mortgage payments are making it hard to manage your budget because they’re too high, refinancing might allow you to have lower monthly payments and put more money back in your pocket.

    But now that you want to refinance, your bad credit score might make you a risk to traditional lenders, like the big banks.

    What can you do?

    The solution — mortgages based on equity.

    Traditional mortgages are based on your income, credit score, and the property criteria (for instance, estimated value).

    Equity-based mortgages are centered on the equity of a property — essentially how much money you have earned by paying down your mortgage. If your property value has increased (or decreased) this could also affect the available equity.

    If you are unable to provide traditional income sources (e.g. if you are self-employed) or if you’ve hurt your credit, an equity-based mortgage can be the perfect solution.

    This can allow you to:

    • Consolidate debt;
    • Pay off back taxes;
    • Finance home renovations or other major expenses,
    • And more.

    DebtCare Canada can find the best equity-based mortgages, including mortgage refinancing, home equity lines of credit, and more. We have a comprehensive list of lenders that offer credit to people in all different circumstances at the fairest rates.

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