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  • Question Corner: When Will CRA Garnishment Happen to Me if I Owe?

    The 2017 income tax deadline is looming on April 30, 2018 and with it the consequences of not paying a tax debt in full. One such consequence if you fail to pay a tax debt is Canada Revenue Agency (CRA) garnishment.

    A CRA garnishment is just one of several scary collections tactics that can happen if you fail to pay your taxes. CRA can garnish up to 50% of your employment income and 100% of your other income, such as contracts or pensions, simply by sending a letter to your employer, or your clients if you are self-employed. The person who receives this letter is legally obligated to send your money straight to CRA or they could face court action.

    Unlike other creditors, the CRA doesn’t need a court order to obtain a wage garnishment. And, scarier still, you may not even know when a CRA wage garnishment will start.

    A CRA garnishment can start any time after the 2017 income tax deadline once CRA has processed your income tax return and provided you with a notice of assessment. This is where you will see the exact amount that you owe.

    If you can’t pay the tax debt in full, that’s when wage garnishment and other collection tactics can begin. You may be able to make a payment arrangement with CRA, but this is nearly impossible for an individual to do on their own. And even if you are sending payments to CRA, they may still garnish.

    If you don’t pay your tax debt and CRA finds out where your income comes from, you are at risk for a wage garnishment.

    CRA can find out your income source in many different ways, such as:

    • You tell CRA or name your employer on a budget or disclosure forms given to CRA.
    • Tax filings by your employer(s).
    • Your client or supplier is audited.
    • And many more.

    There are options to stop a CRA wage garnishment depending on your income, assets, and debt. Some of these options will immediately stop a wage garnishment. Debt consulting companies, such as DebtCare Canada, can assess personal circumstances and arrange whatever solution is the right one.

    Don’t wait – call DebtCare today. We can walk you through the various options and help you avoid a CRA garnishment. 1-888-890-0888.

  • Creating a Plan to Repair your Credit in 2016

    debt12015 is coming to a close, and the past year has likely been full of change – such is life. For many Canadians, this means more debt accumulation, followed by a concern regarding bruised credit. So, why not get started on your New Year’s resolution early and get a plan in place to repair your credit for 2016?

    The first step is to request your credit report from Equifax AND Transunion – sometimes they report different information. This will give you a clear picture of where you stand credit-wise – as well as highlighting any issues with your credit, and should give you a good idea regarding how to start repairing it.

    Generally people have credit problems which fall into a few different groups. Your plan to repair your credit will be based on what the problem is, but typically the problem is bad credit history – defaulted debts and late payments.

    How you deal with this will depend on 3 factors:

    • Whether you owe the money or not – if you don’t owe the money, see below regarding inaccurate items.
    • Whether you have the ability to pay the debt – if you don’t have the ability to pay, see below regarding too much debt and maxed out credit cards.
    • If you owe the money and can pay in full or settle in full, you are about to start a long and arduous process that will involve documenting what the creditor will accept to settle the account, paying it, collecting acknowledgement from the creditor that it has been paid and ensuring that your credit report is updated.

    Something to keep in mind: R9s and collection items come off the credit report 7 years from last activity or when they were settled or paid – that said, you can begin rebuilding right away.

    Old items and inaccurate items on the report:

    In this instance you will need to file a dispute with the appropriate consumer reporting agency and be able to prove the error. This may include providing copies of letters or documented exchanges with your creditor, proof of payments, settlements, etc… This is a formal process – being represented is a good idea. If the agency doesn’t follow the law, a complaint to the government may need to follow.

    Too much debt and maxed out credit cards:

    In this instance you have to deal with the debt before you can fix the credit.

    If there is a lot of debt and no reasonable way you can pay it off, even over a long period of time – making minimum payments, no assets or assets like a home with limited equity – a consumer proposal may be the answer.

    Benefits of a consumer proposal:

    • Stops interest and debt from growing
    • Stops collection action
    • Allows for one monthly payment
    • Can be paid in full at any time – and because payments are generally much lower than the total of all minimum payments to your creditors, you can double and triple up on payments, use income tax refunds and other credits and get the total owed down!
    • Comes off the credit report 3 years from the date it is paid in full

    Once the proposal is filed, it should be independently reported to the credit reporting agencies immediately – the same should also occur once it has been paid.

    Creating your 2016 plan to rebuild and repair your credit should not be stressful – you just have to sit down, be realistic about your credit and finances and make it happen!

    Want to get started? Call DebtCare Canada today – we can help you through the entire process: 1-888-890-0888.

     

  • How to Consolidate Debt and Start the New Year Fresh

    debt12016 is fast approaching, and that usually means setting goals for the year ahead and making plans to get certain things back on track. For many Canadians, this means taking a good, hard look at finances and often attempting to take control of unruly debt by consolidating it. Often the first thing people wonder when considering this option is how to consolidate debt to best suit their own needs.

    There are different ways to consolidate debt depending on your credit, assets and cash flow. Each offers its own pros and cons. If you are considering debt consolidation to help start 2016 on fresh financial footing, here are a few of the most popular options:

    Mortgage Financing

    Mortgage financing usually means taking out an additional mortgage alongside the one you currently have.

    • Pros: One low payment, lower interest than a loan or line of credit.
    • Cons: Expensive closing costs, uses up equity, stretches out debt repayment over a really long time, harder to get for those with bad credit, home ownership a prerequisite.

    Personal Loan/Line of Credit

    This option usually involves heading to the bank or a private lender and taking out a personal loan or line of credit to consolidate.

    • Pros: Usually easy to get compared to a mortgage, not a long process, no upfront fees to borrow.
    • Cons: Generally higher interest rates, and if revolving can become a temptation that is hard to resist for many.

    Consumer Proposal

    • Pros: One payment, no interest, stops collection action, reduces debt, often a lower monthly payment
    • Cons: Temporary impact to credit.

    Bankruptcy

    • Pros: One payment, significantly less debt, stops collection action, no interest
    • Cons: Reporting obligations to the trustee, impact to credit, the amount to be repaid in bankruptcy can change – for example, if you make more money or acquire something the trustee can ask you to repay more surplus income.

    When debt consolidation seems like the best route to take to re-establish your finances and achieve financial stability, these may be the options you consider. Each of these has some important advantages, and the choice will largely depend on your own circumstances and future goals.

    Our best advice – get professional advice. A financial consultant with experience helping people regain their financial footing is the best person for the job – take advantage of their knowledge and expertise and get a plan in place that helps you achieve your goals.

    Want advice you can trust? Call DebtCare Canada today at 1-888-890-0888. We can help you get ready for 2016!

     

  • We Speak Your Language. Having Some Financial Problems and Need Help? DebtCare Offers Services and Consultants that Speak Your Language

    DebtCare Canada is proud to announce that we now offer services in a number of different languages. When you are struggling with your finances, language should not be a further hindrance to obtaining help.

    We now offer financial services in English, Mandarin, Cantonese, Korean, Japanese and Spanish!

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    Use these links to find financial help in your language:

    Need help with a financial problem? DebtCare Canada can help. Call us today at 1-888-890-0888.

  • Can a Collection Agency Issue a Wage Garnishment?

    deb1It is a very common scenario: you’re aware of the existence of a bad debt, but with no means to pay the debt, you instead choose to ignore the calls and notices and hope that you can eventually amass the funds to pay it in full – or just hope that it will eventually go away. Then payday rolls around, and with the intention of taking even just a little bit aside to pay the debt, you find that the creditors have already taken matters into their own hands and issued a wage garnishment – and the amount on your paycheque is far lower than expected.

    If this is the position in which you’ve found yourself, you might be wondering how it even came about. Can a collection agency even issue a wage garnishment – how do they have this power? The ugly truth is that yes, although a collection agency is a third party, it does have the power to secure a wage garnishment when going through the proper channels.

    When you have a debt that you can’t pay, and a creditor assigns the account to a collection agency, that agency may just choose to pursue the matter in court – in order for a garnishment to be leveraged against you, obtaining a judgement in court is first required.

    Does this mean you are being sued? No, the only people who can sue in Ontario courts are lawyers, paralegals, and people representing themselves – meaning, if a creditor has the time and resources, they could choose to sue you. Many don’t, but will pass the matter along to a collection agency, one who will then seek a judgement.

    A collection agency can apply on a creditor’s behalf to court to seek a “garnishment” against you. If granted, this legally allows them to seize your salary, money in your bank account, or other money you own to repay your debt.

    Often when collection agencies threaten to sue on behalf of the creditor, it is to scare you into paying – but there are many instances where it is not an empty threat and a wage garnishment may be imminent.

    If collectors are calling and delivering these threats, a wage garnishment may be headed your way. It is best to deal with the debt before a garnishment is issued, thereby mitigating further damage to your already bruised credit.

    These are your options:

    • Pay the debt in full – although if this really was an option we hope most would have already done it.
    • Make a settlement with the collection agency – sometimes this works, other times it is easier said than done.
    • Look at other options to settle the debt and stop collection action, such as filing a consumer proposal.

    Once a debt goes to collections it won’t just go away – your creditor will just keep assigning it to different agencies and using different tactics to force you to pay.

    If you are standing on a ledge with seemingly no resources at your disposal, don’t despair. DebtCare Canada can help you find a solution to your financial problem and get a wage garnishment lifted before it does more damage. Call us today at 1-888-890-0888.

     

  • Getting Prepared: Consolidate Your Debt Long Before the Holidays

    debt2With the end of September fast approaching, that means the seasons are officially changing. It also means that the holiday season is only 3 short months away. If you are in debt, this can become a stressful time, very quickly. People often rack up considerable debt over the summer months, with family vacations and the like – but once the summer is over, it comes time to face reality once again, and for many that means dealing with that mountain of debt.

    Instead of continuing to put it off, why not establish a plan to deal with the debt sooner, rather than later. Use these tips to help get yourself prepared.-

    -Start with a budget. Look at your monthly payments, where you spend your money on a regular basis. An easy way to do this is with a budget template – one that includes all incoming and outgoing costs. Then think about where you can cut back. Perhaps you can eliminate some of the unnecessary expenditures, instead using that money to pay off your debts.

    -Look at the debt you have. How long have you owed the money, who do you owe the money to, and how much interest are you paying versus what is going onto those balances? Are you only making minimum payments and not actually paying down the debt?

    -Once you’ve examined your debt situation, consider your debt repayment options. Restructure debt if necessary – minimum payments don’t pay down debt.

    -Get a professional financial consultation to learn your consolidation options – while focusing on long and short term financial goals. Consolidating all of your debts may be easier than you think – and the various options available may actually save you a lot of money in the long run.

    -Start saving. With the money that will be required for gifts, why not start putting away a little bit every paycheque? You might be surprised at how much this will take from your shoulders come December.

    With the holidays coming up fast, make this the year you go into the season debt free. Eliminate the stress that this time of year can bring, and instead use it as a time to enjoy family and friends, without having to worry about what the New Year will cost you.

    Rather than racking up holiday debt and crying over those bills in January, why not come up with a financial plan now? Call DebtCare Canada today at 1-888-890-0888.

  • Financial Focus: Wage Garnishments in Ontario

    debtcare1Nothing is worse than getting your wages garnished, and it seems as though this is happening with increased frequency – many Canadian individuals are facing wage garnishments in Ontario as a result of debts in collections, CRA tax debts, or Family Responsibility.

    No matter how you slice it, wage garnishments are brutal, and carry with them various personal and professional consequences. For example, not only will this type of collection action cause personal financial hardship, making bill payments incredibly difficult, it can also impact your professional life. Since wage garnishments are sent to employers, once your employer learns of your financial troubles, your reputation will be impacted, and this could have important and costly ramifications. Additionally, if you own your own business, it will be your clients that receive notice to garnish receivables, thereby impacting your reputation.

    Facts about wage garnishments in Ontario:

    • If you don’t pay your debts, your creditors can take you to court and obtain a court order to have your wages garnished. However, some creditors, the CRA as the most common one, don’t need a court order and can simply send out a Requirement To Pay notice and the deed is done.
    • Under the Ontario Wages Act, a creditor can garnish up to 50% of your gross wages, depending on the organization owed. The actual amount is determined by the court, but typically garnishments in Ontario are around 20%. That being said, if you are self-employed, and owe money to the CRA, a garnishment can get as high as 100% of your receivables.
    • Wage garnishments can be stopped. Some people assume that once a garnishment is in place, it will remain in place until a debt is paid in full. While this is one way to remove a garnishment, it is not the only one.
      • Negotiating a voluntary arrangement with a creditor is an option, although once a creditor has gone through the trouble of garnishing you they are not going to easily let go and may still demand payment in full.
      • Going to court is another option. Keep in mind that this can get expensive, especially if it is tax court. This is because in small claims court you may represent yourself, whereas in tax court you usually need a lawyer.
      • A third option is working with a debt counsellor on a consumer proposal. For many Canadians, this is the option that makes the most sense, often because it will not only stop a wage garnishment in its tracks, it will also freeze interest, consolidate all unsecured debts into one monthly payment, and will often result in a much smaller balance to be paid off.

    Wage garnishments in Ontario can quickly turn a financial issue into a financial nightmare. Once a creditor has leveraged this form of collection action, removal may be difficult, but it is not impossible.  You have options.

    For more about having a wage garnishment lifted, please contact DebtCare Canada today by calling 1-888-890-0888.

     

  • Faceoff – Canadian Bankruptcy Trustees vs. Canadian Debt Counsellors

    debtcareWhen you are struggling to make even the minimum monthly payments to bills, or worse, having to choose which bills to pay each month, it is probably time to consider professional financial help to get things back on track. But how can you best determine which route is the right one, and who you should elect to stand in your corner? We can help. Today’s topic: the financial faceoff – Canadian bankruptcy trustees vs. Canadian debt counsellors. Both can help you get out of debt – but not necessarily in the same way.

    Trustees

    A Canadian bankruptcy trustee is a court appointed officer, appointed by the Superintendent of Bankruptcy. Their role is to administer bankruptcies and consumer proposals – but to do so on behalf of the interests of all parties. They don’t represent you as the client, they represent both you and your creditors. This means that, since they are not your representative, they can use the confidential financial information you provide to them to get the best deal for your creditors. They are paid out of the estate in the case of bankruptcy, and out of your pocket in the case of a consumer proposal, so their paycheque is then determined by how much is paid by you to your creditors.

    Debt Counsellors

    Often bankruptcy trustees like to say that you don’t need to pay a debt counsellor, and can just go right to them. This is because if you do this they can control the filing – which is especially enticing in the case of consumer proposals, where, as mentioned above, the more you pay, the more they earn.

    Instead, debt counsellors are paid by YOU, they represent YOU and only YOU. They know insolvency inside and out and you can trust that any information you provide to them is not going to be used against you – you can tell them everything without fear of unanticipated consequences. The role of a debt counsellor is to structure your financial information, assist you in finding a good trustee, and to help you manage negotiations with a trustee.

    Both bankruptcy and consumer proposals represent important and viable solutions when debt becomes unmanageable. That being said, going right to a trustee and hoping for the most favourable outcome will often leave you disappointed.  Consider speaking with a debt counsellor first and having them negotiate a consumer proposal or bankruptcy on your behalf – NEVER go to a bankruptcy trustee unrepresented.

    For more about the difference between a Canadian bankruptcy trustee and a Canadian debt counsellor, please contact DebtCare Canada today at 1-888-890-0888.

     

  • Back to School Blues? Consolidate Credit Cards and Stop the Interest

    The back to school season, particularly for parents, is often a very hectic time of year, especially with regard to finances. The need/desire for new school clothes, shoes and supplies often leaves parents with racked up credit cards once all is said and done – or rather, purchased. And often accompanying these credit card bills is the challenge of finding money to pay them off.

    Check out this infographic from BMO to see just what these costs add up to:

    debt1

    So, what options are available? Consolidating credit cards is a great way to reduce your debt – and often makes sense – but the type of consolidation depends on your own personal circumstances. Here are a few options that may be available to help you deal with that back to school debt.

    1. Home equity loan. By using the equity in your home, you can consolidate credit cards, thereby reducing interest and consolidating the various bills into one monthly payment. Of course, this is only possible if you own a home and have sufficient equity for this purpose. If you rent, or are without equity, this is probably not going to be a viable option for you.
    2. Consumer proposal. This is another great option, especially if your credit isn’t great or if you don’t have the security or equity for a loan. A consumer proposal will have some impacts on your credit in the short term, but this is balanced out by the fact that interest stops accumulating, there is, like a loan, just a single monthly payment, and in many cases the overall debt owing is reduced.
    3. Line of credit or loan from a lender. This is another good option, and can achieve the same things as a home equity loan: lower interest and one monthly payment. You will need to have good credit or security for this option. At the same time, this is often the most expensive option of all because it will involve higher interest than a home equity loan or a consumer proposal.

    Kids are expensive, and when back to school season rolls around, they can become even more so. Once those bills start coming in, don’t stress. Call DebtCare Canada to find out about how to consolidate credit cards and get rid of debt: 1-888-890-0888.

     

  • Ontario Bankruptcy Trustees – Who They Are and How They Advertise!

    debt careDebt consolidation, get out of debt, debt relief: it is hard to turn on the radio or television these days and not hear one or all of these phrases. Why? Because so many Canadians are facing financial challenges thanks to the ease with which credit is granted coupled with high (credit card) interest. The temptation to pay on credit can quickly lead to getting in over your head, and then struggling to find a solution.

    When it comes down to it, the question is, who advertises these solutions and what do they do?
    Ontario bankruptcy trustees, more aggressively now than ever before, are advertising to the public that they offer the best solution for people facing financial woes. We disagree with much of the advertising we hear from many Ontario Bankruptcy Trustees. Why? Because we exist because of them!

    Ontario bankruptcy trustees promote financial solutions. However, if you choose the solutions offered, the Ontario bankruptcy trustee does not represent you. A bankruptcy trustee in Canada is a court appointed officer who administers estates when a bankruptcy or consumer proposal is filed. They do not represent you, they do not represent your creditors. They apply rules set out in the Bankruptcy and Insolvency Act. The trustee is required to represent the best interests of all parties (and this includes their own financial interests).

    What does this mean? Well, trustees are paid a tariff out of the proceeds of your bankruptcy or consumer proposal. In the case of bankruptcy the fee is fixed, whereas with a consumer proposal the fee grows with the amount of the proposal.

    Some things to know:
    • Trustees advertise to you, despite the fact that they don’t represent you – this is because without you, they have no business.
    • In the case of bankruptcy, finding surplus income means that they can extend your bankruptcy and collect larger tariffs because the bankruptcy is being administered for a longer period of time.
    • In the case of consumer proposals, convincing you to propose a higher amount to your creditors will result in the collection of more fees – and thus is a major priority for them.

    Now, of course a few bad apples shouldn’t spoil the whole bunch, and we don’t mean to say that all trustees are shady. Many trustees in bankruptcy are reputable and do business above board – but the few that don’t can do a lot of damage. There are just too many conflicts of interest and the law needs to go further in terms of requiring trustees to state in their advertising that while they are promoting a service they don’t represent you.

    A consumer proposal or bankruptcy is often a really good financial solution for someone backed into a corner. These allow for one monthly payment, can reduce debt, stop interest, and stop collections. Just keep in mind, just as you wouldn’t go to a meeting at the CRA without your accountant, you shouldn’t go to a trustee without your own independent financial representation.

    Financial counsellors who specialize in bankruptcy and proposals can structure the numbers, review your information, make recommendations, and bring a proposal forward to a trustee on your behalf- protecting you throughout the entire process.

    DebtCare Canada represents your best interests – yours and yours alone. Call us today BEFORE contacting a trustee: 1-888-890-0888.