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  • CRA Tax Debt? Is a Voluntary Disclosure Application the Answer?

    Did you know about the Canada Revenue Agency (CRA) Taxpayer Relief Program for tax debt relief? If you have a CRA tax debt you’re likely pretty stressed about it, but don’t worry, you are not alone. Dealing with a tax debt takes work, but in order to avoid further aggravating the issue, it is something you need to do right away.

    Maybe you’ve already considered applying for the CRA’s Taxpayer Relief Program. This program gives taxpayers the opportunity, under certain conditions, to apply for relief of interest and penalties. Since penalties and interest on a CRA tax debt grow very quickly, this is an important resource.

    Tax debt may leave you feeling hopeless, but just remember: you’re not breaking the law simply because you owe money to the CRA. Just don’t ignore the problem either, hoping it will go away. CRA is mandated to act within their means to get the taxes you owe, and they can utilize all available enforcement tricks and strategies to do so. If you’re not careful, this can easily leave you in a financial mess.

    What types of enforcement action are we talking about? Wage garnishments, frozen bank accounts, even property liens, are all popular options for the CRA. Each one, however, has the potential to leave you feeling strapped.

    What options do you have? Enforcement action can be avoided if you have the means to pay the CRA in full. If you don’t, it is time to consider what other avenues are open to get the tax debt dealt with.

    Bankruptcy – If you have a tax debt in addition to a mountain of other debt, filing for bankruptcy may be the smartest solution. Doing so provides you with the ultimate fresh start – one you know you can achieve in as little as nine months.

    Consumer Proposal – A consumer proposal is another option. If your personal debt, including your tax debt, is significant, a proposal to all creditors may result in a decreased total owing, a definite payback period, and no interest.

    What’s important to keep in mind with both of these options though is that you want to have someone in your corner at all times. An experienced debt consultant has the knowledge and expertise to assess your unique situation and help you determine the best course of action to suit your current needs and future goals.

    When you have a CRA tax debt, the best thing to do is work with a qualified financial professional to know your options and make the wisest choice.

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

  • Happy Halloween! The Scariest Collection Action of All: Garnished Wages

    In the spirit of Halloween, we decided to dedicate this blog to the most common – and some would even say terrifying – enforcement action a creditor can take against you: a wage garnishment. Yes, it sounds scary and it can be. Having your wages garnished is an extremely unpleasant reality when you’re already struggling with debt.

    Having your wages garnished means that a creditor has received a court order to obtain unpaid debts from you. This shows up on your credit report, and your employer will receive notice that they should start taking money from your pay to send your creditor. Not only can this be financially debilitating, it may also be potentially embarrassing at work.

    Depending on who your creditor is, the amount of the garnishment and process taken to garnish your wages will be different. For example, the process and amount with regard to CRA wage garnishments differs from all other creditors.

    The CRA is unique in that they do not need a court order to garnish you. They can garnish up to 50% of your employment earnings, and up to 100% of your other earnings, like contract income or your pension, simply by sending notice to your employer. Where other creditors are concerned, they must file a claim against you and win a judgment to take enforcement action, and typically only take 20% of your earnings.

    In either case, if a creditor is garnishing or threatening to have your wages garnished, it is because you have a debt you have not yet, or cannot, pay. To see the garnishment removed you will have to offer some form of arrangement that is satisfactory to your creditor. If they are already getting monthly installments from you on a garnishment – why would they want to accept a voluntary arrangement? Usually the only solution is to pay the debt in full.

    Don’t have the ready cash on hand to do so? Perhaps look at your home equity and investments to see if you have anything you could use to obtain financing to pay the debt. If you don’t, a bankruptcy or consumer proposal may be on the table.

    There are programs that you can participate in that will stop a wage garnishment, provide you with a single monthly payment on all your debts that you can afford, and stop interest, but the right solution depends on your income, income type, family composition, total debts, and more.

    At DebtCare, we can help you determine the best options to settle wage garnishment issues.

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

     

  • Current Home Mortgage Rates – Serious Food for Thought

    In comparison to current home mortgage rates, over the past seven years, Canadians enjoyed relatively low interest rates. While experts repeatedly warned that borrowing costs would eventually have to rise, it didn’t seem to stop people from borrowing and increasing their debt load.

    Then as predicted, the Bank of Canada hiked rates in July and again in September. Now current home mortgage rates are twice what they were just a few months ago. Both times the Bank of Canada (BOC) raised the key lending rate, Canada’s Big Five banks – the Bank of Montreal, CIBC, Royal Bank of Canada, TD Bank and Scotiabank – all raised their prime lending rate to coincide.

    What are mortgage interest rates today? As of right now, these are the mortgage rates the Big Five were offering for a 5-year fixed mortgage:

    • TD Bank – 3.24
    • Bank of Montreal – 3.24
    • RBC – 4.81
    • Scotiabank – 4.84
    • CIBC – 4.89

    **Source: www.Ratehub.ca

    As you can see, there’s quite a difference between TD and CIBC – a split of more than 1.5%. It seems amazing that three of the Big Five are offering a rate of almost 5% on a 5-year fixed term after so many years of low interest. 5% is twice the average from before the rates went up. This means a new 25-year mortgage, with a 5-year fixed-term rate, would result in huge increases to monthly mortgage payments, not to mention the increased payments on any other debt – credit or otherwise – that you may be carrying.

    For comparison, let’s look at what a homeowner buying a $250,000 home, with a 10% down payment, could expect to pay on a 5-year variable-rate mortgage. For interest’s sake, we’ve compared what they would have paid before BOC raised the rates, and what they can expect to pay now.

    In any scenario, if you bought a $250,000 house and paid a 10% deposit, the mortgage you would need would be $231,975 (if you purchased a home for $250,000 and paid a 10% deposit, the deposit would be $25,000 and you would start with a mortgage of approximately $231,975 once the CMHC premium is added. If CMHC is not insuring the deal you would have a mortgage of $225,000). When Canadians were still living large with low interest, the average mortgage rate for a 5-year fixed rate and 25-year amortization was 2.3%. That works out to $1,016 a month in mortgage payments and at the end of five years, the remaining principal would be $195,542.

    However, this is no longer the reality. Let’s look at what all those figures would be if the mortgage rate was 5%. The monthly mortgage payment would be $1,349 a month. That’s a huge increase in monthly payments — more than 30%. After five years, the balance would be $205,315. Meaning, with the rise in rates, almost $10,000 over the next five years will go to interest versus principal compared to the 2.3% rate scenario.

    When you add in other expenses and debt repayment, averaging another $300 to $400 per month can be insurmountable to some families, especially if you are also trying to pay down other debt. If these numbers worry you, you may want to look at options to help you manage.

    You could go straight to your bank and ask about the products they have on offer. But will the bank offer you products that are in your best interest? What about your credit history and current debt load? Will these stand up to the bank’s stringent lending guidelines? It may be time to consider talking to an independent financial professional who can show you a few different options. Perhaps tackling your debt, especially if it has itself become unmanageable, is the best first step.

    Current home mortgage rates may continue to go up – economists predict a rise of 1.5 or even 2% by 2018. If you have concerns about your finances and how interest rates could impact your ability to purchase a home or pay down existing debt, call DebtCare right away to learn how we can help you choose the option that’s best for you.

    We’re always here to help: 1 (888) 890-0888.

    SOURCE: http://www.huffingtonpost.ca/2017/09/07/canadas-big-5-banks-all-raise-interest-rates-by-the-same-amount_a_23200309/

     

  • More Regulations Needed for Payday Loan Companies

    You see them on almost every street, in every strip mall, and all over the internet. You hear about them on the radio and see their commercials on television all the time. Payday loan companies are, despite the constant bad press, booming in Canada. While they claim to help those who think they have very few financial options, what they are actually doing is making that individual’s financial situation worse!

    Payday loans are dangerous – there is no doubt about it.

    A payday loan is a short-term, high-interest loan that’s advertised as a convenient option to make up a financial shortfall between paycheques. However, what they don’t advertise is that, when you take out a payday loan, you usually end up getting more pain than you bargained for.

    Various news outlets have continued to warn consumers about the dangers of payday loans and push for change within the industry, and the changes are starting to come.

    According to the Toronto Star, back in January the Ontario government made moves to help consumers being preyed upon by payday lenders. New regulations “lowered the cost of a payday loan from $21 to $18 charged on a $100 loan.” However, as noted, “while an $18 fee on $100 of borrowed money may seem like a manageable sum, when annualized the interest rates these payday lenders are charging is 469 per cent.”

    The city of Hamilton has also stepped up, becoming the first region in Ontario to regulate payday lenders in a major way. Now, payday loan companies in Hamilton are required to “pay a licensing fee, post the annualized interest rates they are charging (compared to the chartered bank’s rate of interest), and require staff at payday loan outlets to provide city-sanctioned information on credit counselling services.”

    These are definitely steps in the right direction. Still, those fees and interest rates can quickly add up, making repayment very difficult.

    If you’re one of the thousands of Canadians currently trying to figure out a way to climb out of a hole created by a continuous renewal of a payday loan, we can help. Stop struggling. We can sit down with you and work out a strategy to get those payday loans off the table and help you create a budget to better meet your monthly financial obligations.

    At DebtCare, your financial success is our goal – and that means eliminating the need for and the issues caused by payday loans.

    Get in touch with us today by calling 1 (888) 890-0888.

    Source: Toronto Star, “Time for Ontario to ban predatory payday loan operators: Opinion,” https://www.thestar.com/opinion/commentary/2017/03/03/time-for-ontario-to-ban-predatory-payday-loan-operators-opinion.html.

     

  • Is a Consumer Proposal the Right Answer?

    Over the last few years, as Canadian consumer debt levels have risen, many Canadians have found a consumer proposal to be a very viable option for debt relief. When debt becomes overwhelming and payments are being missed, climbing out of the hole can seem impossible. Sometimes a consumer proposal is the best way to get a handle on things and start fresh, but is it always the answer?

    With a consumer proposal, a careful review of your financial situation results in a proposed amount to be repaid to your existing creditors. This number is then presented to the creditors, and the majority must accept. Once accepted, the proposal is legally binding.

    The benefits of a consumer proposal are well known. Once a proposal is accepted by the majority of your creditors and is in place, you no longer have to pay interest, can pay the debt back over 4-5 years, and often have to pay back less than the total owed. Additionally, all debts included in the proposal are combined and so you only have to make one monthly payment. The downside is that your credit will take a hit, but if you’re considering a proposal, this may have already happened.

    As far as how much debt is enough to warrant a consumer proposal, there is no established minimum, but people don’t generally file one unless they owe $8000 or more.

    Sound too good to be true? It isn’t. Really.

    But is it the best option?

    Let’s compare it to another popular debt relief option, a second mortgage. A second mortgage using some of the equity in your home is another great way to get a handle on your debt. Although it involves interest, you can make the term shorter so that the debt is paid off sooner. A second mortgage has the same benefit as a consumer proposal in that it consolidates all your debt into one smaller monthly payment, although it doesn’t reduce the amount of your debt or eliminate the payment of interest. A second mortgage is also much better credit-wise and won’t result in the negative impacts to your credit. Of course, you need equity to go this route, but if you have it, it can be a smart option.

    When it comes to dealing with debt that has grown to an unmanageable amount, a consumer proposal may be the best option, but as you can see, it is worth discussing your financial situation with a financial consultant prior to making a decision to see if any other options are worth pursuing, such as a second mortgage.

    At DebtCare, our goal is to help you find the right debt solution to suit your circumstances, be it a consumer proposal or something else.

    Want to get started? Call us today at 1 (888) 890-0888.

     

  • The Difference Between a Wage Garnishment from the Government and a Creditor

    A wage garnishment is a very popular (or unpopular, depending on your experience) form of collection action. When money is owed to a creditor, obtaining a judgment for enforcement action and implementing a wage garnishment is a common method for retrieval of funds. The Canada Revenue Agency (CRA) is also well known for imposing wage garnishments when money is owed. The process, however, is different for each. So, what’s the difference between a wage garnishment from the government and one from a creditor? We’ll explain.

    Firstly, what is a wage garnishment? When you owe a creditor or the CRA, but have failed to make the necessary payments, that organization has the ability to pursue a garnishment of your wages. Once this happens, your employer will receive a notice of garnishment, which lists the debt amount and the name of the creditor. Your employer is then required by law to pay a portion of your wages. The amount can differ depending on a variety of factors, as well as the organization seeking the garnishment.

    When a creditor garnishes your wages, you will have some warning. Not only will you receive a letter informing you of their intention, the creditor is also required to obtain a judgment against you in court, meaning they must sue you in an action which you can defend. If you fail to defend or don’t receive the letter and judgment is obtained, a notice is sent, as mentioned, to your employer and your employer must then submit the specified portion of your wages to pay your outstanding debt.

    The major difference when the CRA garnishes your wages is that they are not required to obtain a court order. When you owe the CRA and they choose to garnish your wages, they simply send a notice to your employer directly. You may not receive any warning, only finding out about the garnishment on payday. As with a creditor, once this garnishment notice is received by your employer, they are required by law to submit a portion of your paycheque.

    What can you do if your wages are being garnished? Wage garnishments can be devastating financially, so it is important to address the issue as soon as you are made aware of it. Once it is in place, your options are few. To have a garnishment removed you can try negotiating with your creditor to settle the debt, pay the debt in full, or file a consumer proposal or bankruptcy. These options are the same whether you are being garnished by a creditor or the CRA.

    It is a very common practice for both creditors and the CRA to garnish wages. Wage garnishments are typically very effective as they allow the creditor to intercept money before it gets to you.

    At DebtCare, we deal with wage garnishments every day.

    If you’re struggling as a result of one, get in touch with us today to discuss your options for having it removed. 1 (888) 890-0888.

     

  • Things You Need to Know About Licensed Insolvency Trustees

    Fact: Consumer proposals and bankruptcies are two legal debt settlement options available through the Bankruptcy and Insolvency Act. Both processes can only be administered by a Licensed Insolvency Trustee (LIT). That being said, you do not have to go directly to a Licensed Insolvency Trustee for a consumer proposal or bankruptcy. In fact, you are better served with your own representation.

    This week, our aim is to clear up some of the confusion regarding Licensed Insolvency Trustees and how they work.

    When you’re struggling financially, are finding it difficult to make your monthly payments, or have missed several payments, there are numerous options that exist to help you regain control. Two of those options are a consumer proposal and bankruptcy.

    As mentioned, both must be administered by a Licensed Insolvency Trustee. However, the problem here is that, while LITs claim neutrality – they say they represent both parties (you and the creditor) – they have an obligation to maximize the return for the creditor.

    Does this make sense? Compare it to real estate. If you were buying a new home, would you want the same real estate agent representing you and the person selling their home to you? Since that agent is paid on commission, their goal would be to get as much money from you, the buyer, as possible. How can this result in a fair settlement?

    It is much the same with a consumer proposal, as the amount a Licensed Insolvency Trustee is paid depends on the amount of the proposal agreed upon. So, in a nutshell, the higher the proposal, and thus the more you have to pay, the more the LIT earns. So, if the LIT is getting paid according to the amount of the proposal, what is there to motivate them to get as small a proposal as possible.

    If you’re financially strapped, every cent counts. If you go directly to a Licensed Insolvency Trustee, you can’t be guaranteed the best deal. That can only be obtained through your own representation, someone who is hired by you to protect your money.

    Furthermore, if you go directly to a Licensed Insolvency Trustee you may only be given the option of a consumer proposal or bankruptcy, even if there are more valuable solutions out there, such as mortgage refinancing or even just a strict budgeting plan.

    At DebtCare, our goal is to get the best deal for you. We are here to protect you and only you. Want valuable advice and real protection?

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

     

  • In The Know: Common Old Debt FAQs

    It is typical for us to receive at least a few calls a week about old debts. In an effort to address some of the most common questions, we thought we’d dedicate this week’s blog to answering a few of the ones related to old debts – questions we get, as mentioned, on a regular basis.

    Common Old Debt FAQs

    1. Does debt expire? No. If you don’t pay a debt, you will always owe it. Debt never just disappears from the record books.
    2. Is there a statute of limitations on taking action to collect a debt? Yes. This is where most of the confusion stems from. While old debts never expire, there is a statute of limitations for creditors on commencing action to collect a debt. In Ontario, if a creditor does not register a complaint with the court against you within that 2 year timeline, they lose the ability to enforce collections (wage garnishments, frozen bank accounts, property liens, etc.).
    3. What if a creditor registers a complaint before the 2 year timeline is up? Once the action is commenced, there is no statute of limitations and that creditor will be able to enforce collections on the debt, plus court fees, forever.
    4. Do creditors sell debts to collection agencies? Yes, while many creditors will engage collection agencies to collect debts on their behalf, if they do not take action to register a complaint with the courts within the 2 years of your default, they will often decide to sell that debt to an agency at a reduced rate in an effort to recoup at least a portion of their money. Once this happens, they wipe their hands of the debt.
    5. What happens if a collection agency buys an old debt? If a collection agency buys an old debt, their goal is to collect from you. This is often done through continuous contact attempts and threats to scare you. Many will agree to minimal repayment terms, stating after a payment is made they will stop calling. However, it is important to note that, once you make a payment, even if it is only $1, you reactivate the debt! If the 2 years has passed, and you agree to make a payment, this signifies a re-acknowledgement of the debt, removes the limitations on it, and gives them the ability to enforce collections.
    6. What should I do if a collection agency starts calling me about an old debt? Tell them that you know that the statute of limitations has passed and you know your rights. Advise them to stop calling you or you will call the police for harassment, which you have every right to do under the Consumer Protection Act.
    7. How will not paying an old debt impact my credit? While the statute of limitations means a debt more than 2 years old can’t be enforced as far as collections, meaning you don’t technically have to pay it, it does stay on your credit for 7 years. This can do serious damage to your credit report, making it difficult (if not impossible) to obtain new credit of any kind.

    If you’re concerned about an old debt that’s currently haunting you, or new debt that you just can’t seem to get a handle on, call DebtCare today to find out about the various options available.

    We’re here to help: 1 (888) 890-0888.

     

  • Differences Between Various Types of Debt Companies

    As a financial consulting company, we are often asked about the different types of debt companies. With several different types offering several different services, it is so important to know what these differences are. When you’re looking for solutions to a financial problem, ensuring you’re dealing with the right company is essential.

    Debt settlement companies. These types of debt companies have received a significant amount of bad press in recent years – and for good reason. While these companies claim to offer debt help, what they actually do is often far more dangerous. Most will tell you to stop paying your bills and instead they will collect your money to later settle your debts. Over time, as this money accrues in their account, your debts grow, and your credit is severely damaged. By the end of the agreement, you will likely have paid far more in fees, ruined your credit, and made your overall financial problems worse. What’s worse, many of these companies have gone out of business before ever releasing any money collected.

    Debt consultants. Debt consultants typically offer one service and that is to review your financials and then send you to a trustee for a consumer proposal or bankruptcy. If your debt is significant, sometimes a consumer proposal or bankruptcy is the best option. However, debt consultants will present them as the only ones, even if they don’t actually make the most sense, sometimes causing more harm than good.

    Financial consulting companies. These companies deal with a wide range of financial products and services and can help both those with major financial troubles as well as those with smaller financial issues. These companies don’t take the ‘one-size-fits-all’ approach and instead begin with a thorough examination of your circumstances to be able to offer the most valuable advice. Most will offer solutions such as mortgages, consulting, help with budgeting, even overall representation in addition to bankruptcies and consumer proposals. These companies are more concerned with ensuring you make the right decision for your circumstances – not their bottom line.

    When you’re struggling to meet your financial obligations and the stress is keeping you up at night, you need real help, help that will actually make sense. Financial consulting companies are there to ensure that you receive the advice and assistance you need, no matter what your situation is.

    When it comes to debt companies, don’t settle for anything less than the best. It is your money, protect it. DebtCare Canada is proud to be a financial consulting company that offers a wide variety of services to clients looking for debt help.

    Call us today for a free consultation: 1 (888) 890-0888.

     

  • Money Saving Tips for Back to School

    The summer is winding down and that means the back to school season is just around the corner. While most of us are probably reluctant to think about the relaxing summer days and warm summer nights ending, knowing the kids are headed back to the classroom often isn’t quite so bad! That being said, back to school spending can often put a damper on this exciting season for parents, and so we’ve compiled a list of some of the best money saving tips for back to school!

    Back to School Money Saving Tips

    See what you already have at home before you shop. Make a list of what your children need and raid the closet and supply room. Most of what you need is probably already tucked away somewhere in your home, and thus doesn’t need to be purchased again!

    The local dollar store is your best friend. Sure, those big box office supply stores may seem like the most likely place to find everything your child needs for back to school supply-wise, but of course these places charge far more. Instead, check out your local dollar store for all the same items at much lower price points. You can even turn this into a fun summer activity to beat the boredom by having your kids decorate those items to make them unique.

    Set a budget and stick to it. This is the most important tip. When you set a budget based on what you can afford to spend, and stay within its confines, you don’t run the risk of going overboard or finding yourself strapped when other payments roll around. Let the kids know the budget exists, and that this year a few main items, rather than a whole new wardrobe, is the name of the game.

    Buy in bulk. Making lunch every day can get expensive, so spending a little more upfront can sometimes save you a bunch down the road. Granola bars, juice boxes, fruit snacks – these are all easy to buy in bulk and store at home for easy lunch additions. Be sure to compare the price and volumes of bulk items. Sometimes the savings will surprise you!

    The school year costs money, so start saving for field trips and extra-curricular activities now. Whether your child plays sports, a musical instrument, or is into art or dance, those things cost extra money. So do the numerous field trips and school lunches. By putting away a little each week, starting at the beginning of the year, you won’t feel so strapped when the events come up since you’ll have a little bit of extra cash stashed away just for the occasion.

    For many parents, the back to school season can be almost as expensive as the holiday season, so this year take these back to school money saving tips to the bank and save!

    Finding yourself concerned even with these tips? At DebtCare, our goal is to help you establish financial security no matter what your current situation is.

    Call us today for a free consultation. 1 (888) 890-0888.