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  • Consumer Proposal vs. Refinancing Your Mortgage – Which is Better for You?

    If you are like the many Canadians facing overwhelming amounts of debt, you may be considering a consumer proposal vs. refinancing your mortgage to help ease the pain. Maybe you’re wondering how a second mortgage vs. consumer proposal stacks up? That’s what we’re here to help you find out.

    In this week’s blog, we’ll compare making a consumer proposal vs. refinancing your mortgage. Let’s start by examining the key differences:

    Mortgage refinancing:

    • preserves your credit
    • provides a low consolidated monthly payment
    • may eliminate payments to debts completely
    • offers low interest
    • repayment timeline can be shortened or lengthened
    • allows you to take out cash that can be used to spend, invest or pay other debts
    • enables you to move from an adjustable to a fixed-rate mortgage

    In some cases, you may be able to pay your home off more quickly than you would have under your original mortgage. Mortgage refinancing to consolidate debt uses your home equity to pay debt. People choose this option because of the flexibility and the possibility of a lower interest rate and more manageable monthly payments.

    A consumer proposal:

    • stops interest from accruing
    • stops any wage garnishments immediately
    • stops creditor calls immediately
    • can be repaid over as many as 60 months to lower your monthly interest free payment
    • allows you to keep your car, tools, and other personal belongings
    • eliminates all debt, including tax debt, with a few exceptions
    • while it impacts your credit negatively in the short term, this has likely already happened if debt has become unmanageable, and gives you the chance to rebuild more quickly.

    Unlike refinancing, a consumer proposal is a legal solution and can only be administered by a Licensed Insolvency Trustee (LIT).Something to keep in mind about LITs: they are administrators who earn money based on the size of the proposal negotiated. They are court-appointed officers who do not represent you. They have a job to ensure that you make a proposal that is a win for your creditors. This can be confusing because many LITs market solutions as though they represent you. The truth is that they work for your creditors as much as they work for you, meaning you aren’t protected.

    So how do you choose between mortgage refinancing or a consumer proposal? If you have enough equity to refinance your mortgage, then you may not be a likely candidate for a consumer proposal. If you have enough equity that if you refinanced you could pay a portion of your debt, then an informal settlement negotiation with your creditors using the proceeds of your mortgage refinance could be the answer.

    However, if you don’t have enough equity, don’t own your own home, or have less than stellar credit history, a consumer proposal might be the better option.

    Whatever your situation, if you are looking for a solution to your debt problems, such as considering a consumer proposal vs. refinancing your mortgage,start by consulting an experienced financial consultant, one who will discuss all the financial options available to you, outline the pros and cons, and help you pick the best plan that suits your needs.

    Call DebtCare today to discuss your options. 1 (888) 890-0888.

  • Consider Consolidating Debt Before Canadian Interest Rates Go Through the Roof!

    The interest rate may go up again – are you prepared?

    If not, it may be time to consider consolidating debt before this happens. It’s been all over the news that the Bank of Canada (BOC) recently announced a significant increase in Canada’s prime interest rate. A strong Canadian economy was one contributing factor in this decision. And, if it does continue to perform well, which hopefully it does, raising rates may just become a trend. If you’re carrying a mortgage and other debt, it may be time to find out how to consolidate debt.

    A hike in interest on mortgages for the average Canadian family could have long-term impacts in the hundreds of thousands of dollars they may currently carry in debt. Consolidating debt may help offset that increase because every slight increase can result in additional monthly payments of hundreds of dollars each month. According to a 2016 TransUnion report, more than 250,000 Canadian credit consumers might find themselves in financial trouble if rates rose by 1%.

    If you own a home, now is a good time to look long and hard at your debt and examine how you can use any existing equity to reduce interest rates on your other debt payments.

    While demand is still high for Canadian real estate, increased interest rates could eventually slow this demand, and that could severely impact the value of your property. It may end up eliminating the equity you need to refinance and consolidate your debt.

    Here are some options to consider:

    • Mortgage financing: This usually means taking out a second mortgage in addition to the one you currently have.
    • Personal loan/line of credit: This means going to a bank or private lender to take out a personal loan or line of credit to consolidate. This often isn’t an option for those with debt problems or bruised credit.
    • Consumer Proposal: This involves a plan for one payment with no interest that stops collection action, reduces debt and requires a lower monthly payment.
    • Bankruptcy: This is a one-payment option with no interest which stops collection action and gives you a fresh financial start.

    There are pros and cons to all the debt consolidation options, and the one you choose to get your finances settled and reach financial stability will be decided by your circumstances and financial goals. A financial consultant with experience helping people get back in good financial shape is the best place to start. They have the knowledge and expertise to help you set a plan to meet your goals with consolidating debt.

    At DebtCare, we’re here to help you achieve financial freedom. Call us today at 1-888-890-0888.

  • The Taxman Taketh Away: How to Reduce Crippling CRA Penalties

    CRA penalties and interest can be crippling and even double the size of a tax debt. We’ve all heard horror stories about the CRA and its efforts to enforce repayment. If you are facing Canada Revenue Agency (CRA) penalties, then you need to determine how you are going to reduce that burden in a way that works for you, not the CRA.

    Yes, the CRA does offer some programs that remove penalties and interest, such as:

    1. The Taxpayer Relief Program – intended to provide relief of penalties and interest to those who can prove that an extraordinary circumstance led to their tax problem.
    2. The Voluntary Disclosure Program – offers a second chance to change a tax return you previously filed or to file a return that you should have filed.

    Keep in mind that these are complicated programs to apply for. Furthermore, where relief is concerned, it is difficult to get CRA approval for even partial relief of penalties and interest.

    Even if CRA agrees to cancel some or all your penalties and interest, you will still be left with a tax debt. Plus, the CRA never makes settlements on tax principal.The only question at this point is: can you pay the tax debt? If you can, then pay it.

    If you cannot, then the problem is a much bigger one.The CRA will collect one way or another, there is no way around that fact.

    The only way that you can get rid of CRA penalties, interest, and potentially reduce the principal tax debt you owe is through a consumer proposal or bankruptcy. Both will also protect you from disastrous enforcement action or stop it if it has already been put in place.

    When exploring either option, keep in mind that consumer proposals and bankruptcies must be administered by a Licensed Insolvency Trustee (LIT). Why is this important? Because LITs do not represent you. They represent your creditors, and therefore will be doing everything they can to collect the most for the creditors. Once you share your personal and financial information with an LIT, they may be able to find ways to go after more of your money and assets.

    Protect yourself and your information by always seeking out your own professional financial advice to explore all your options before going to a LIT.

    At DebtCare, we want to help you become debt free.

    Get in touch to discuss the best option for you by calling 1-888-890-0888.

  • The Difference Between Financial Consulting Companies and Debt Settlement Companies

    The number of debt settlement companies in Canada seems to have risen dramatically over the past five to 10 years. With more and more Canadians finding themselves struggling with debt, it’s a sign of the times that companies offering debt relief have increased in number. In this post, we’ll focus on what to look for when it comes to legitimate debt relief versus going to one of the many debt settlement companies out there.

    Many people are signing up for debt settlement programs because of the way the companies almost guarantee an easy way out of debt problems. However, there are several problems with this option, especially when the debt settlement company you choose is not completely open and honest, or less than reputable. In this case, you could easily end up with more problems than you started with.

    For years, warnings have been issued by consumer protection agencies and governments alike about the perils of working with these operators. Debt settlement companies claim to negotiate with creditors on behalf of consumers and arrange payment schedules or settlements. The typical debt settlement company’s solution involves you paying them money monthly (instead of your creditors) and then when they have enough they will endeavour to make a settlement with your creditors.

    The problem is that many of these companies ask for money up front and you must pay fees to the companies for their services. Unfortunately, there have been many instances reported where consumers have paid into debt relief programs only to have the company disappear overnight – with their fees, but no results. Furthermore, putting off paying your creditors in exchange for paying these companies can severely damage your credit.

    Some other alarming facts to consider about debt settlement companies:

    • They only have success rate on average no higher than 10%.
    • Fees paid can often be equal to or exceed the amount you owe.

    Due to the rise of unscrupulous behaviour of several debt settlement companies, the federal government has posted a consumer alert that reminds consumers of the dangers of working with these organizations. You can read more about the federal government’s warning here: https://www.canada.ca/en/financial-consumer-agency/services/debt/debt-help/alert-debt-credit-repair.html

    If you are in a financial pickle, your best choice is working with a professional debt consultant. They will work to protect your best interests when developing debt relief solutions. Here are four reasons to work with an independent financial professional:

    1. They provide impartial advice on a range of solutions.
    2. They do not charge up-front fees and will first propose a realistic plan that suits your specific needs.
    3. They can help with complex issues such as tax debt, or other financial situations that may involve enforcement action.
    4. Along with consulting services, they offer financial advice, such as budgeting and relief programs, to help you explore all your options to becoming debt-free.

    Your financial situation is unique and different from everyone else’s situation. Hiring a good financial consultant or adviser who will work with you to develop a solution tailored to your circumstances is the best way to start on the path to fixing your finances.

    At DebtCare, we put your needs first. Before you start calling debt settlement companies, call us today for a consultation at 1 (888) 890-0888.

  • How to Build Great Credit – A Plan for 2018

    Happy New Year everyone! If you are like the thousands of other Canadians out there with a New Year’s resolution to become financially fit, this blog should help, especially if you need to work specifically on your credit. There are certain steps to take if you want to learn how to build great credit. If it’s time to plan to get out of debt and learn how to fix bad credit, read on!

    Here are some tips to fix your credit:

    • Always start by requesting your credit report from Equifax and TransUnion. It is important to know your current situation and where you stand credit history-wise in order to set a goal to reach a better rating by the end of 2018.
    • Set a budget – know what you have available to spend, what you need to spend it on, and where you have room.Whatever is left over, use it to pay down your debt and build your savings up.
    • Start paying down your cards one by one.
    • Once you get there, try to keep your cards at only 50% of their credit limits.
    • Always make more than the minimum monthly payments.
    • Settle collection debts – often you can make settlements with collection agencies if you will pay the settlement amount in full.
    • Send the credit reporting agency proof of any major developments like paying off a major account or a settlement to ensure that your report is updated.
    • Only borrow what you can afford.
    • Stay away from payday loans at all costs – they don’t build credit and can become a major problem very quickly.

    It can take years to build great credit and a high credit score, and you can just as easily blow it in six months. If your debt is manageable, you can start paying down each creditor, such as each of your credit cards, one at a time. You can also look at your assets to see what you can use to consolidate your debt. However, if your debt is unmanageable, you will need to seriously consider financial alternatives.

    Re-building your credit can be a long process, but if you make the resolution to stick with and build great credit, you can improve your rating and restore your financial situation.

    At DebtCare, we can help you determine the best financial solution to your debt situation.

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

  • Happy Holidays from DebtCare

    The DebtCare team extends our warmest greetings of the season and best wishes for
    health and happiness in the New Year.

     

  • Consumer Corner: Everyone is Recommending a Consumer Proposal When I Want to Go Bankrupt

    Most people understand the concept of bankruptcy – a situation where you surrender everything you own in exchange for debt elimination – but what about a consumer proposal? Perhaps you’ve heard the commercials or done your own research. If you’re in significant debt, having trouble making monthly payments, or just looking for some breathing room, a consumer proposal is a fantastic debt relief option.

    If you’re looking for a solution to a financial problem or accumulated debt, you may be considering the benefits of a bankruptcy versus consumer proposal and wondering which one to choose.

    So, what exactly is a consumer proposal? It is a formal, legally binding process that is administered by a Licensed Insolvency Trustee (LIT). In this process, the LIT will work with you to develop a “proposal”—an offer to pay creditors a percentage of what is owed to them.

    Some consumers feel they want to go the bankruptcy route to solve their debt problems in one fell swoop, but find that a consumer proposal is recommended instead. What’s the difference?

    Some benefits of a consumer proposal include:

    • You can pay it off early – you can’t do that with a bankruptcy.
    • It’s your final agreement – bankruptcies will continue until your bankruptcy trustee discharges you.
    • You know exactly when the debt will be paid off.
    • You can rebuild credit sooner – consumer proposals are removed from the credit report three years after they are paid in full, whereas bankruptcies stay for six years from the date you are discharged.
    • Your debts are combined into one monthly payment that you can afford.
    • If the majority of your creditors accept the consumer proposal, your other creditors are automatically included.
    • All interest stops, as do most wage garnishments. This is the same with bankruptcy.

    If you’re thinking of making a consumer proposal, start by consulting with a financial professional who specializes in this before heading directly to trustee. They can structure your information and negotiate your proposal with the LIT to help you potentially save thousands of dollars, even tens of thousands of dollars.

    Protect yourself and your money. At DebtCare, we can independently review your financial situation to make practical financial recommendations that will work for you.

    We’re always in your corner. Call us today at: 1 (888) 890-0888.

     

  • Canada’s Second Mortgage Rate Increase in a Row – What Does it Mean to You?

    Back in September, for the second time this year, the Bank of Canada raised interest rates, leading to the inevitable mortgage rate increase at banks and lending institutions across the country. How does the latest BOC interest rate increase impact you?

    After seven years of historically low interest rates, analysts and economists predicted that a mortgage rate increase was in the cards. Experts predicted that the BOC would raise rates because of the unending growth of hot urban real estate markets like Vancouver and Toronto and the increasing levels of consumer debt carried by Canadians. They also noted that, despite all signs indicating weak inflation, the economy continues to exceed expectations.

    After months of speculation, in July the BOC finally posted the first overnight rate increase in what seemed like forever. But it was the most recent increase in September to a full 1% that really surprised some economists, many of whom believed that at least a few more months would be required to have the economy settle after the first rate increase.

    Macleans suggests that this will be the last rise for some time while the BOC monitors the “sensitivity of the economy to higher interest rates.” However, Business News Network put forward an argument that the BOC could just as easily justify rate hike number three as early as October. At the beginning of 2017, economists predicted rates would rise by 1.25% sometime in early 2018. Could it happen even earlier?

    Why are interest rates rising? In a nutshell, when economic growth is high, as it is in Canada currently, demand for money increases, pushing the interest rates up. And, with the overnight rate at 1%, the mortgage rates at the Big Five banks went up accordingly.

    Mortgage rates now range from 3.25% to almost 5% on a 5-year fixed-term mortgage. Compared to an average rate of 2.3% just a few months ago, such an increase could make obtaining a new mortgage more difficult, especially for anyone with outstanding debt. This is especially true if there’s going to be another rate hike this year.

    To improve your circumstances, whether you’re planning on seeking financing at those higher rates or just want to be prepared, you should tackle your overall debt. A great way to do this is by taking advantage of the equity in your home. Home equity loans allow you to borrow against the value stored in your home. They can be useful for borrowing large amounts of money, and they’re easier to qualify for than other types of loans because they are secured against your house.

    If your home is worth more than you owe on it, a home equity loan can provide funds for anything you want (you don’t just have to use it on home-related expenses, for example). A home equity loan is a type of second mortgage.

    After the recent mortgage rate increase, it may be time for you to take a good look at your financial situation before another one is announced. Whether tapping into your home equity, renewing or refinancing your mortgage, or getting a second mortgage, you could potentially save hundreds, even thousands, of dollars. With so many options available, it may seem impossible to decide which option is best for you.

    Before you make a decision, we recommend consulting a financial professional first, someone with your best interests in mind who can guide you to the best solution for you.

    At DebtCare, we can help you choose the best options to suit your needs and your budget.

    Call us today at: 1 (888) 890-0888.

  • Debt Relief for Seniors: A Health Consideration

    Unfortunately, we’ve been receiving more and more calls from people recently inquiring about debt relief for seniors, as more and more people over the age of 65 head into retirement saddled with debt. With an ever-increasing elderly population and more Canadians than ever carrying huge debt loads, debt relief for seniors facing retirement is a growing concern.

    The Financial Post recently reported that in the last year, the number of Canadians over 65 with debt rose by 4.3 percent, whereas almost every other age group experienced a decrease. Why are seniors racking up so much debt? Even with many home equity lines of credit in the 3% range, it’s easy for seniors to borrow for real estate, renos, or to help their kids, but quickly get in over their heads.

    Seniors now account for 8% of bankruptcies, up from 6% five years ago. The fastest growing risk group among all age groups filing for bankruptcy continues to be seniors. They carry an enormous amount of debt, built up over a lifetime. On average, they owe more than $64,000 in credit card and other debt.

    When seniors carry debt into retirement, they run the risk of not being able to meet payments because generally their income has dropped. This makes it hard to repay existing debt. Seniors then borrow more money to cover their mortgage or credit card bills, eating up a much larger chunk of their fixed, lower income.

    The stress of carrying debt is hard on anyone, but is especially so for seniors who may be more vulnerable to mental and physical health issues. For example, depression is one of the more common consequences of stress among seniors, which can lead to loss of interest in eating.

    Stress can also cause damage to brain cells, and in seniors that can lead to permanent cognitive issues such as memory loss. Not only does stress affect mental health, it can also affect a senior’s physical health too. When we’re stressed, our immune systems are weakened, and in seniors this could mean critical complications, such as catching pnemonia.

    With consumer debt levels rising in Canada, more seniors find themselves facing retirement with high levels of credit card debt, lines of credit, and bank loans. These are serious financial problems that could lead to health issues just as they’re getting ready to enjoy retirement.

    It doesn’t matter how old you are. If you are looking at mounting debt, you need a plan to deal with the situation so you can avoid the impacts of being stressed about your finances.

    If you or an elderly person you know is struggling with debt, find a financial consulting company who specializes in advising on debt relief for seniors so that they can help you enjoy retirement stress free.

    At DebtCare, we can help. Get in touch today by calling 1 (888) 890-0888.

     

  • Avoiding a Wage Garnishment or Other Enforcement Action: Protecting Your Information

    If you find yourself drowning in debt, unable to meet your monthly financial obligations, you may soon find yourself facing a wage garnishment or other enforcement action if you don’t take the appropriate steps to deal with the problem. Being in debt isn’t a great feeling, but it doesn’t mean the situation is hopeless. To help avoid having a creditor garnish wages, it pays to be diligent in keeping your personal and financial information safe.

    A wage garnishment, frozen bank account or property lien on your home can happen easily if you are not careful about how you guard your personal and financial information. With very basic information about you and your assets, including any property you own, your creditors can easily take action to collect.

    Creditors often investigate public documents regarding property ownership and income to find out if you have the means to pay. If they have reason to believe you have sufficient income or assets, they will come after you. Some innocent sounding questions from your creditor when discussing repayment plans can lead to serious enforcement action down the road. Working with a creditor, you may be asked where you bank. Now they know which account to freeze. Maybe they ask where you live, and now they know where to look to place a property lien. Questions about employment and clients can easily lead to wage garnishment, which can be a substantial cut.

    Simply by protecting your information you can buy yourself some time to get your debt straightened out.

    If you’re concerned about a potential wage garnishment, whether a creditor has contacted you for the above information or not, the best thing you can do is pay the outstanding debt in full. This will eliminate the need for your creditor to seek you out. However, if you’re worried that your current financial situation won’t allow for payment in full (as is likely the case, otherwise you wouldn’t be in the situation), you need to think about other ways to remedy the situation.

    One of the best things that you can do if you know that you owe a creditor, and want to avoid a wage garnishment because you don’t have the means to pay in full, is to consult a financial professional. Whatever you do, don’t panic. And DO NOT answer any financial/personal questions from creditors without first consulting a professional.

    At DebtCare, we can help you explore your options. Call us today at 1 (888) 890-0888.