debtcare.ca

Tag: Debtcare

  • What is a Canadian Bankruptcy Trustee’s Role in a Consumer Proposal?

    Canadian bankruptcy trusteeA Canadian Bankruptcy Trustee’s role in a consumer proposal can be very confusing for consumers largely because of the advertising done by Canadian Bankruptcy Trustees. These Trustees advertise a way out of debt and offer to help you out of your financial problems, almost as though they represent you and your best interests through the process.

    Full stop. This is not the case at all.

    Trustees need you in order to stay in business. No bankruptcies and consumer proposals = no need for the Trustee. In fact, while in a bankruptcy they are bound by pre-defined tariffs, in a consumer proposal they are compensated based on the amount of the consumer proposal. Bigger proposal = more fees for them. While they advertise the benefits of a bankruptcy or proposal and are the only ones who can administer one, they in no way represent you.

    In order to be able to understand their role in the consumer proposal process, let’s look at what the duties of a Canadian Bankruptcy Trustee actually are.

    Consumer proposals and bankruptcies are both very powerful tools you can deploy to put a stop to debt that has become unmanageable. Because the process to file both is legislated under the Bankruptcy and Insolvency Act (BIA), both must be administered by a Trustee appointed by the Superintendent of Bankruptcy. This Trustee is the Bankruptcy Trustee. Their role is to ensure that a consumer proposal or bankruptcy is administered fairly and in accordance with the BIA – to the benefit of you AND your creditors.

    When you meet the Trustee in Bankruptcy you may see no harm in divulging personal information to them because you feel that you are with your representative. However, that information may be considered in whatever proposal scenario they put forward. Once you disclose information to the Bankruptcy Trustee, this information can now be relayed to your creditors.

    Going to a Trustee in Bankruptcy directly would be the same as being charged with a crime and meeting with the prosecutor without a lawyer. Prior to making contact with a Trustee you should sit down with a trusted financial advisor who has experience with insolvency to work through different financial scenarios – one of which may be a proposal. Because this individual is your representative, you are able to openly discuss all of the issues and then they can advise you on which options are relevant to bring forward.

    Earlier in the blog we mentioned that the Bankruptcy Trustee is the only professional who can administer a bankruptcy or consumer proposal, and this is true, but it is never wise to meet with one without your own representation.

    Protect yourself and your financial assets – contact DebtCare before you go to a Trustee. Call us today at 1-888-890-0888.

  • The Last Loan

    the last loanWe wanted to write this blog because we often see patterns regarding triggers for serious financial problems and clear points in time where different choices could have changed the course of the problem. Sure, there are instances where a sudden occurrence, such as a job loss or divorce, can cause abrupt and unexpected financial turmoil, but more often than not people build their financial problem over time.

    This is evidenced by just about every news publication reporting that Canadians are carrying a dangerously high level of personal debt. Over time debt accumulates like a snowball.

    Example scenario:

    • It only takes using those credit cards too much one month to push you into a situation where you can’t pay in full and so you make a smaller payment.
    • Eventually you have a few cards with small balances so you decide to get a line of credit to consolidate them – only you keep using the cards once you’ve paid them off.
    • Finally you decide that enough is enough – you get a consolidation loan at the bank to pay the line of credit and the credit cards.
    • You go a couple of months without using the cards but then your transmission goes. You think, well, you will only use the card once, but this means the cycle starts again…
    • A year later, you have the consolidation loan and a balance on the line of credit and a couple of credit cards.
    • You have accumulated some equity in your property, so you decide to get a second mortgage to pay off all the debt one final time. You are successful in doing so.
    • However, in the end, just like with the last consolidation loan, a few months later you begin using your cards again and a year later you find yourself making a slew of minimum payments on your credit cards.

    Now you reach a pivotal point – another loan? We say no! Let your last loan be the last loan.

    Just as Einstein said, the definition of insanity is doing the same thing over and over again and expecting different results. If you continue to refinance and restructure your debt year over year, each year owing more, you will be caught in a cycle that is not going to break unless you win the lottery or get a major raise at work (and how likely is either one of these?).

    There comes a time when one must say “self, I need to get some professional help”. Just like you may go to a therapist for a personal problem or a lawyer for a legal problem, one who continues to struggle with accumulated debt also benefits from professional guidance.

    Stop the insanity! Maybe there is a quick fix and some help with budgeting is the answer, or perhaps you have really dug yourself into a hole and need some major intervention. Either way, you are going to need to do something very different to break the financial cycle you are in.

    If you would like to make your last loan your last loan and need financial guidance DebtCare Canada can help. Call us today 1-888-890-0888.

  • Myth vs Fact: Consumer Proposal vs Bankruptcy

    consumer proposal, consumer proposal vs bankruptcyConsumer proposals and bankruptcy are often confused with one another because they both involve a Trustee in Bankruptcy. In Canada, the government introduced legislation to protect people who have reached a breaking point with their debt. Over time that legislation has been amended and re-worked to simplify processes and to make the process fair for both creditors and those who owe money.

    The Superintendent of Bankruptcy is an entity of Industry Canada, and is the individual who administers the Bankruptcy and Insolvency Act through appointed officers. These officers are Trustees in Bankruptcy. The Trustee in Bankruptcy’s role is to administer a consumer proposal or bankruptcy on behalf of the creditors and the people who owe money.

    A bankruptcy and a consumer proposal are both powerful in that, once filed, all collection and enforcement action being made by unsecured creditors stops, interest stops, and in many cases the overall amount of debt is reduced.

    That being said, a consumer proposal bears less strings than bankruptcy and should always be considered as option number 1 – bankruptcy is generally a last resort measure.

    In a consumer proposal, a proposal is made to your creditors – basically you are offering them a sum of money to be repaid through the Trustee over a term of, typically, 5 years.

    • Your creditors have a specified amount of time to accept or reject the proposal.
    • If no one responds, the proposal is accepted.
    • If the majority creditor(s) accepts, the proposal is accepted.
    • If a proposal is accepted you make a single monthly payment to the Trustee for the term proposed. You can pay off the proposal at any time. You have no ongoing income reporting requirements to your Trustee.

    In a bankruptcy your creditors don’t get a choice to accept or reject.

    • You make a monthly payment to the Trustee in Bankruptcy over 9 or 21 months in a first time bankruptcy, depending on your income. There are maximum income thresholds set out and if your income exceeds those thresholds the term of your bankruptcy payment extends from 9 to 21 months.
    • During your bankruptcy you have to report your income and any changes to your financial circumstances to the Trustee.
    • If you come into any significant sums of money you may have to pay surplus income to the Trustee.

    A consumer proposal is removed from your credit report 3 years from the date it is paid in full. A bankruptcy remains for 6 years from the date of discharge.

    Since the Trustee doesn’t represent you, going to one directly is never recommended. Any financial information you divulge can’t be taken back. Prior to meeting a Trustee you are best served to work with a financial representative who specializes in bankruptcy and consumer proposals – one who will represent you – to review and help you structure your financial information to be presented to a Trustee. Some may even help you negotiate the terms of your proposal or bankruptcy with the Trustee.

    Both of these options are viable when it comes to debt relief – just make sure that you are not putting your financial affairs at risk by attending a Trustee before seeking real help.

    For more information or to protect yourself before going to a Trustee, please call DebtCare Canada today at 1-888-890-0888.

  • Income Tax Time is Here – Preparing for the 2015 Tax Deadline

    2015 tax deadlineCanada’s income tax deadline for the 2014 tax year is right around the corner! While some anticipate refunds and are off to file with bells on, others are dreading this date and even considering not filing because of a tax debt that will follow.

    First of all, if you think you will owe, not filing is not the answer. You may think it will buy you time, but really all it will buy is penalties, interest and a bad history with CRA. If you think you will owe, be realistic about what you will owe and your ability to repay.

    Now, it is true that once you file CRA will ask you to pay the debt in full. With that said, CRA has been known to accept payment plans of up to 24 months on a tax debt. While there is no guarantee that this will happen for you, it has happened for others.

    If you took the amount of your tax debt and divided it by 24 months, would you be able to afford to repay the debt?

    If the answer is yes, the next steps you take are crucial.

    Negotiating directly with CRA can be dangerous. Before agreeing to any monthly payment arrangement they will ask for full disclosure of your assets, income, income sources, debt and more…

    The challenge here is that they may agree to payments over a 6 month period, based on a 24 month repayment, and then at the end of 6 months take the option to re-review your financial information. At this point they can reject renegotiating the monthly payments, demand payment in full and then use the information in your financial disclosure to take collection action against you.

    Another common occurrence is that when you submit an honest budget which includes your minimum obligations to other creditors, the CRA may then reject those payments and say that any surplus funds which could be directed to other creditors need to be directed to CRA. Even with all of this said, you absolutely do need to do something.

    If the answer was no…

    If you know that repaying the debt monthly, even over 24 months, is highly unlikely, you need to get some financial assistance immediately. A professional experienced with financial restructuring may be able to come up with a solution where you can repay the debt over a longer term, say 5 years.

    In either scenario…

    In either case, professional help is a necessity. Negotiating with CRA is, to be frank, too dangerous financially. Financial professionals with knowledge regarding dealing with CRA know how to navigate the bureaucracy and protect your information.

    Don’t ignore a tax debt in the hopes that it will magically disappear – it won’t. Call DebtCare Canada today: 1-888-890-0888.

  • Backed into a Corner: Stopping a Wage Garnishment

    Stopping a Wage GarnishmentYou’ve just received your bi-weekly paycheque, but the money deposited in your account is far lower than what is stated on your paycheque. After inquiries to your payroll department, you realize that this is not a mistake to be remedied by your company, but rather the result of some unpaid bills. A wage garnishment can be a financially devastating thing, one that is actually incredibly common, so what can you do to stop it?

    Firstly, what is a wage garnishment? Well, when you owe money to a creditor that you have not paid, they may opt to head to court and obtain an order to have those debts garnished from your paycheque, unless you owe money to the Canada Revenue Agency and then a court order isn’t even necessary. Once this order is obtained, a requirement to pay letter is sent to your employer, who is then legally required to submit a portion of your wages – to the tune of up to 50% – directly to the court.

    Wait – can’t your employer just say no? Not unless they want to deal with the repercussions! When it comes to these court orders, besides paying your debts, there are only 3 other ways to stop a wage garnishment:

    Making a deal with your creditor. Start here, but we suggest not getting your hopes up. If your creditor has taken the steps to obtain a court order against you, they likely have already attempted to contact you on numerous occasions and would therefore be unlikely to accept a negotiated repayment plan.

    Consumer proposal. Once a consumer proposal has been filed, all wage garnishments stop! And the bonus here is that not only are you stopping your wages from being taken, you also stop all interest and merge all of your debt payments into one convenient monthly payment that you can afford. The downside – your credit can be negatively impacted (although that has likely already occurred).

    Bankruptcy. Like a consumer proposal, declaring bankruptcy stops all wage garnishments and eliminates many of your current debts. In exchange for this, you are required to adhere to certain regulations including attending credit counselling sessions and declaring surplus income. And like a consumer proposal, your credit can be negatively impacted.

    If you believe a wage garnishment may be forthcoming, or if one has already been leveraged against you, don’t worry – we can help. For more about stopping the garnishment of your wages please contact DebtCare Canada today by calling 1-888-890-0888.

  • Happy Holidays From DebtCare Canada

    DebtCare - Happy HolidaysIt is officially that time of year again, and we just want to wish everyone a very happy holiday season. For many of us, 2014 has been full of great memories to cherish, and for many of our clients, it has also been a time of exciting financial victory – we are proud to have been a part of that triumph!

    With the New Year just days away, and New Year’s resolutions being written, just remember – if you are struggling with financial problems, DebtCare Canada can help. You don’t need to struggle or continue to face those financial hardships on your own. Call us to help establish a plan to make 2015 your year for financial freedom!

    Call DebtCare Canada today at 1-888-890-0888.

  • Who Is Spending? Canadian Household Debt

    Canadian consumer debt has continued to rise over the last few months, and although the delinquency rate has dropped, the spending has not. But since the delinquency rate has dropped, that means that individuals are more conscious of the need to keep up with paying off Canadian household debt – which is always a good thing.

    So who is spending, who is responsible for dealing with household debt, and how do Canadians feel about their retirement financials? Check out this great infographic “He Debt, She Debt.”

    Who Is Spending? Canadian Household Debt

    According to the survey, both men and women say debt repayment should be a top priority, but there were a few interesting findings:

    • Who is responsible for household debt?
    1. It is equal: 39% men vs. 54% women
    2. Me or mostly me: 56% men vs. 36% women
    3. My partner or mostly my partner: 4% men vs. 10% women
    • Are you confident you’ll be debt-free at retirement?
      • 55% of men and 49% of women said yes
    • Do you find the idea of retiring with debt stressful?
      • 60% of women and 42% of men said yes

    Where do you stand as far as these survey results? Are you the big spender in your household? Do you feel as though retiring without debt is a feasible achievement?

    If Canadian household debt seems to be a stressor, no matter who is responsible, or if you feel like retiring without debt might be an impossible goal, please call DebtCare Canada today. We can help you deal with your debt problem and get you back on a firm financial footing: 1-888-890-0888.

  • Tips for Dealing with Debt Over the Holiday Season

    Dealing with DebtThe holidays should be time to relax, enjoy time with family and friends, and eat far too much delicious food – but for far too many of us, this time of year is also accompanied by a biting anxiety when you think about the amount of money being spent. For those individuals with debt, holiday spending can be a major stress inducer – so we’ve developed a list of easy to implement tips to help with dealing with debt over the holidays.

    Tips for dealing with debt over the holidays:

    First off, set a holiday budget and keep track of what you spend. Establishing a budget is the best way to ensure that you don’t overspend. Have several people to buy for? Divide that budget into envelopes and take those with you when you shop – once an envelope is empty you are finished with that person.

    Start a Secret Santa tradition. Instead of buying for all of the adults in your family, draw names and set a budget and each person buys only for one person – this can seriously cut costs.

    Shop with a list. This can help curb over-spending if you stick to the list rather than buying everything that you see and think others will love.

    Shop early. You still have a few weeks before you have to give those gifts, so get started right now. This also helps to give you time to price match, ensuring everything you want is in stock. And when shopping early, take the time to look for sales and discounts.

    Get creative. If you have the time and the imagination you can save a ton of money by making gifts rather than buying them. Take advantage of Pinterest for great gift ideas that you can make yourself – you might even find some great ideas and suggestions on saving money in other ways.

    Remember: many of us start out with good intentions –buying everything with credits cards with the intention of paying these cards off as soon as the holidays are over – but this isn’t usually what happens and many individuals find themselves paying for their holiday spending months into the New Year. Don’t let the holidays = huge credit card debt.

    Dealing with debt during the holidays can be a challenge, especially if you are already struggling financially, but these tips may just help you keep things in perspective and stop you from going overboard.

    For more about dealing with debt, whether during the holidays or at any time during the year, please contact DebtCare Canada for tips that you can use any time: 1-888-890-0888.

  • Getting Back in The Black: Credit Card Debt

    Credit Card DebtCredit card debt – the giant elephant in the room that sometimes you don’t even want to acknowledge, let alone discuss with anyone else. We all know that sometimes it gets to the point that ignoring this monetary mountain seems like the only way to preserve your sanity – but if you’ve reached this point we urge you to reconsider! In this case, the phrase ignorance is bliss could never be more incorrect!!

    Here are some realistic credit card debt solutions that can help you get a handle on these financial obligations:

    • Pay the minimum monthly payment at the very least. Never ignore a credit card statement – this will quickly destroy your credit. If you can, pay a bit more than your minimum payment on each card. Since monthly minimum payments are mostly interest, paying just a bit more each month means you are actually paying off the balance.
    • Pay the card with the highest interest first. With interest rates as high as 29%, your monthly payments on credit cards are going to be almost all interest – meaning very little is actually being achieved as far as paying these cards off. A popular method for getting rid of credit card debt is to start with the card with the highest interest rate and pay as much as your budget will allow on top of the minimum payment, while still maintaining the minimum payments on your other cards. Once that card if paid off, start on the card with the next highest interest rate.

    Sure, these two suggestions are both great if possible – but if you can’t pay even the minimum, it might be time to think about some other options.

    • Apply for a debt consolidation loan. One of the reasons that credit card debt is so problematic is because of its high interest. If you have more than one credit card company hounding you for payments on a regular basis, why not consolidate all of those debts into one with a consolidation loan with a lower interest rate. Not only does this option reduce the amount that you are required to pay (meaning more is applied to the amount owing rather than just empty interest payments), it also keeps it contained with one convenient monthly payment.

    Can’t get a handle on your credit card debt and feel as though you are suffocating? Don’t let it become insurmountable. Get in touch with a debt solutions organization with the knowledge and expertise that can help you get a grip on this all too common financial problem.

    For more about strategies for dealing with credit card debt please call DebtCare Canada today at 1-888-890-0888.

  • Educating Yourself on Dealing with Divorce Debt

    Divorce DebtIt is common knowledge that when a marriage ends, finances often need a complete overhaul, and significant debt is often a product of splitting assets and building a new life. Dealing with divorce debt can sometimes be incredibly difficult, especially when it is coupled with the emotional turmoil that often accompanies the dissolution of a marriage. That being said, the best way to move forwards is to deal with those things that can increase your stress.

    First, make an appointment to establish a budget. A professional financial consultant can help you go over all of your finances and create a budget that sticks to your post-divorce lifestyle. Since your monthly monetary intake will change significantly post-divorce, facing this head-on is crucial. Once you are on your own, it is even more essential to live within your financial means. Your lifestyle will change, that is inevitable, but creating a budget that takes this into account is an intelligent way to ensure that monthly bills are paid on time, all the time.

    Has divorce created debt that seems insurmountable? You are not alone. Many divorced couples, after a divorce is finalized, find themselves faced with debt that accrued as a result of this event. The splitting of assets, selling a home, lawyer fees, etc. can mean a much higher debt load than was owed previously, and so dealing with divorce debt right away is important. If you don’t think that you can handle the debt that has built up over the course of the proceedings, you are like many other individuals out there, so don’t worry, there are options available to help you overcome this hurdle.

    Debt consolidation. A debt consolidation is an important option to consider now that your income has been cut in half. This is because a debt consolidation will consolidate all debts into one (hence the name), meaning far less interest being paid monthly, and one convenient monthly payment. This makes meeting financial obligations much easier and saves you money.

    Consumer proposal. Once marital debt has been divided, and the amounts you are required to pay monthly seem to far outweigh your monthly income, a consumer proposal might be a smart option. A consumer proposal is an arrangement made with your creditors that not only results in one low monthly payment you can afford, it also means a reduction in overall debt based on a proposal made to creditors for partial repayment and partial forgiveness.

    These are just two of the many options available if you find yourself in the difficult financial position that is dealing with divorce debt. For more information on one of these options, please contact DebtCare Canada – we have years of experience helping individuals deal with debt and divorce: 1-888-890-0888.