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Tag: Debtcare

  • How Can I Fix My Credit?

    Fix My CreditWe all know that bad things happen to good people. No one wakes up in the morning wanting to damage his or her credit. Thousands of Canadians have damaged credit, so if you are wondering “how can I fix my credit”, know that you are not alone and fortunately it can be done – and fairly quickly.

    To all those who want the answer to the question “how can I fix my credit”, here are some tips:

    Before you can repair credit you must deal with any past problem credit. First of all, the old adage that bad credit, even bad credit with unpaid balances, will simply fall off the credit report after 7 years is a myth and banking on that happening may leave you disappointed in the end. Before you can repair your credit you must get rid of unpaid balances associated with bad credit. Easier said than done, right? Well, actually it isn’t. There are many programs available to consumers who have outstanding balances on bad credit where you can make settlements at significantly less than what you owe and freeze the interest accruing. Debt consolidation is another realistic option. Leveraging home equity or having a co-signer can enable you to consolidate debt, paying off the defaulted balances.

    Once the bad credit balances are dealt with it’s time to get to work and rebuild. The two best products that can be used to accomplish this are a secured credit card which reports to your credit report coupled with a secured loan like a GIC which will report to your credit and enable you to work towards an asset. Avoid credit products that bear sky high interest and don’t report to your credit report like payday loans.

    Once new credit is arranged to rebuild, how you manage the new credit will be vital. Many misguided consumers think that when they get that secured credit card they should use it and make monthly payments to rebuild. Unlike installment credit (a loan), revolving credit can be good for your credit or ruin your credit depending how you manage it – even if you make your monthly payments on time. If you run up a large balance on your secured credit card and it is close to, at, or over the limit, this will negatively impact your credit. A good rule of thumb is to only use what you can pay in full each month and don’t exceed 50% of your credit limit as a balance. This means that if you have a secured card with a $200 limit, keep your monthly spending on the credit card under $100 per month. How you manage even the smallest credit card is an indicator to future creditors of whether or not you are a credit risk.

    What to avoid: avoid store cards like furniture cards. All too often people buy furniture and get financing on a card offered through the store. If you buy $2,000 worth of furniture and then they get you approved for $2,000 worth of financing – even if it is interest free and even if there are no monthly payment obligations – this will have the impact of a maxed out credit card on your credit report. Avoid making more than 4 applications for credit in any one given calendar year. Credit applications are reported to your credit report and too many will reduce your credit score and make you appear as a “credit seeker” to new creditors. Be careful because many companies will try to look at your credit: employers, banks when opening accounts, gyms, insurance companies, etc. Generally speaking, if you are about to go into a contract with any organization and you are being asked to sign something, read the small print – it could include your permission to access your credit report.

    Now that we have addressed the question “how can I fix my credit”, let’s get started! Contact DebtCare Canada today at 888-890-0888 or visit www.debtcare.ca.

  • Spring Cleaning Should Include Cleaning Up Your Finances

    Cleaning you your FinancesThe sun is shining and spring is in the air. Cars are lined up at carwashes and the parks are filled with people taking advantage of the warm weather. And, with the advent of spring comes the inevitable ‘spring clean’. From a financial perspective, the spring clean also represents the perfect opportunity to get your finances cleaned up.

    Still feeling weighed down by a financial boulder? You are not alone. Canadians everywhere are dealing with rising debt loads and relying on credit to pay for everything. If you are struggling with debt, it is time to take control and clean up your finances. We’ve compiled a list of ways to help you manage this spring clean.

    Financial Spring Clean Tip #1: Make a list. Sure this list won’t include things like washing all of the windows or cleaning out the garage, but it should include those financial goals you want to achieve in the coming months. It is easier to stick to something if you can physically tick things off of that list.

    Financial Spring Clean Tip #2: Create a budget. Sure this seems like a band-aid solution that many individuals attempt – but if you are serious about taking out the ‘debt’ trash, creating a realistic budget and sticking to it is crucial. A budget, one that takes into account every aspect of your monthly finances, can show you exactly where you need to sweep away some of that extra spending and where you can save.

    Financial Spring Clean Tip #3: Organize. Just as you would organize those closets or bins collecting miscellaneous junk, organize your debt. A great way to do this is to consolidate. Instead of having several different credit cards, loans, and lines of credit, consolidating debt merges all of these into one, neat, tidy monthly payment. The added bonus here is that this also reduces the amount of your monthly interest. So, just like purging your closet gets rid of those items collecting dust, consolidation gets rid of that extra financial burden.

    Financial Spring Clean Tip #4: Call in the professionals. Rather than attempting to tackle that mountain on your own, seek the guidance of someone that knows exactly how to help you get out of debt. A professional financial consultant can give you the advice you need and present the options that will help you get rid of your debt. Whether it be budgeting tips, a consumer proposal, or bankruptcy, a seasoned financial consultant, one with your best interest in mind, will get you on the right track to financial spring cleaning.

    Don’t let another year of debt build up. See spring as the perfect opportunity to get your finances under control and regain your financial independence.

    To get started on your financial spring cleaning and get rid of your debt for good, please contact DebtCare Canada online or call 888-890-0888.

  • 3 Reasons Why You Should Not Try to Negotiate with the CRA Directly

    3 Reasons Why You Should Not Try to Negotiate with the CRA Directly photoThousands of Canadians struggle with tax problems. One of the worst things that you can do if you have a tax problem that has or will result in a debt that you can’t pay is to try to negotiate with the CRA directly. The reason for this is because the CRA has a single mandate and that is to close your file, whether the money is successfully collected from you or not.

    It may sound like it doesn’t make sense, but in fact it does. When a taxpayer is behind filing tax returns or has a large tax debt, the CRA’s success is actually benchmarked by files closed and not dollars collected. This means that, as time goes on, interest and penalties accumulate and by the time you file late returns or decide to try to pay your tax debt, bam – your tax debt may have doubled or even tripled in size.

    How does the CRA close files? By coming after you! Leveraging tactics like wage garnishments, sending garnishments to your clients (in the case of self-employed people and contractors), freezing your bank account, placing liens on your property and more… Sometimes one tactic will be deployed or multiples will be deployed all at once. Doing this forces you to do one of two things – pay the debt or go bankrupt or file a consumer proposal – all three result in your file being closed.

    This is why negotiating directly with the CRA can be dangerous. The average person doesn’t know what the CRA is capable of, so in good faith will try to negotiate, resulting in more personal exposure. The CRA will play good cop, bad cop – having one agent go after you and then another swooping in and being nice, delicately extracting your personal information to be used against you at a later date. The CRA may accept a temporary payment plan or suspend an enforcement measure “if” you complete a financial disclosure form that includes telling them any assets that you own, where you work and where you bank.

    While the CRA has methods to find out your personal information, why serve it up to them on a silver platter, making it that much quicker and easier for them to come after you? At the end of the day, if you have a tax debt that you cannot pay you have a financial problem.

    A financial problem can be resolved through a consultation with a financial consultant who routinely deals with CRA matters. Don’t go it alone – good help is out there. If you have a tax debt and you need help please call DebtCare Canada at 888-890-0888 or visit www.debtcare.ca.

  • What to Do if Your Wages Are Being Garnished

    Wages Being GarnishedIf your wages are being garnished then no doubt you are feeling the pain. Having your wages garnished results in severe financial problems and even embarrassment at work. There are different types of wage garnishments that have financial impacts.

    If your wages are being garnished as a result of family responsibility there is little that you can do outside of working with a lawyer to try to get the amount of the wage garnishment reduced or to work towards paying up your arrears and then moving to a voluntary monthly payment plan. There isn’t really any protection for individuals who have unpaid child support. Child support wage garnishments can consume up to 50% of your income.

    If your wages are being garnished as a result of a judgement in small claims court you do have some options. You can make a motion to the local small claims court and ask a judge to reduce the amount of the wage garnishment or to lift it and allow for an agreed-upon voluntary monthly payment. While this can be effective, the courts do have the final say, and can say no. It also depends on your creditor. You can also look at working with a financial consultant to make a proposal to your creditor so that they agree to lift the judgement. This can be quite effective and even result in the interest that is accumulating on your debt being frozen. A garnishment imposed through the small claims court can consume up to 20% of your wages in most Canadian provinces.

    If your wages are being garnished by the Canada Revenue Agency (CRA) this is by far the most dangerous type of garnishment. A CRA garnishment can consume up to 50% of employment income and up to 100% of secondary income. For example, if you are a contractor the CRA can demand that your client send 100% of your earnings. This is the most dangerous type of garnishment because a CRA imposed garnishment can literally make it impossible to pay for the necessities of life, such as food, transportation and shelter. Those who are self-employed may lose business or have clients simply walk away because dealing with the garnishment is just too much hassle.

    Like judgements issued through small claims court, a good financial consultant can also help you to combat a CRA garnishment. There are programs and protections available that can stop a garnishment (even one issued by the CRA), freeze interest and even reduce the amount of the debt.

    Do not continue suffering in silence. If a wage garnishment is holding you back, help is only a phone call away. For more information please call DebtCare Canada at 888-890-0888 or visit www.debtcare.ca.

  • Why an Ontario Trustee in Bankruptcy May Not be the Best Choice

    Traditionally when people think of an Ontario trustee in bankruptcy they think of bankruptcy. The fact is that the Ontario trustee in bankruptcy has changed in recent years. In the past, if you had severe financial problems, you may have thought that bankruptcy was the only way out and so you would seek out an Ontario trustee in bankruptcy.

    So what has changed? In recent years, the bankruptcy laws have changed making it more difficult to file for bankruptcy and making consumer proposals a much more attractive option for people who struggle with debt. Also, Ontario trustees in bankruptcy have begun advertising much more aggressively. If you don’t know what an Ontario trustee in bankruptcy is then you may misunderstand this advertising and think that when you are calling you are going to have some other financial options. However, generally speaking, the only two programs that bankruptcy trustees offer are bankruptcies and consumer proposals.

    So what’s the big deal if you end up at an Ontario bankruptcy trustee’s office? Maybe a consumer proposal or bankruptcy was what you had in mind anyway. Going to an Ontario bankruptcy trustee may in fact be a big deal because if you buy into the debt solutions offered, a trustee does not in fact represent you and you alone through the process.

    An Ontario bankruptcy trustee has a responsibility to represent both you and your creditors. This means that if you want to file a bankruptcy or consumer proposal it is the trustee’s job to ensure that your creditors get a fair deal and that they are able to get as much money out of you as possible. Here is a really great example:

    1. Suzy goes to an Ontario trustee in bankruptcy and decides that bankruptcy is the only option for her. The Ontario trustee in bankruptcy asks Suzy to complete a long document where she has to provide detailed financial information.
    2. Suzy owns a home that she bought 5 years ago for $300,000 and assumes that it is worth about the same amount of money, so she indicates on the form that the home’s value is $300,000.
    3. The Ontario bankruptcy trustee allows her to file for bankruptcy based on the financial disclosure that Suzy has made.
    4. Based on this approval, Suzy is told what her monthly payment will be over a prescribed time period.
    5. The Ontario trustee in bankruptcy has a team inside his or her firm which reviews the bankrupt’s assets, and without provocation from creditors, the Ontario trustee in bankruptcy later deems that Suzy’s house is worth $400,000, not $300,000.
    6. The Ontario trustee in bankruptcy writes to Suzy and advises her that she owes thousands of dollars in surplus income that will have to be paid to her creditors or else the Ontario trustee in bankruptcy will oppose her discharge.

    Can you imagine how you would feel if this happened to you? Filing for bankruptcy or filing a consumer proposal unrepresented is much like being accused of a crime and defending yourself without representation. If you were being charged with a crime it would not be wise to go to court without a lawyer. Where an Ontario trustee in bankruptcy is concerned, it may not be a good choice to go to them directly without seeking independent financial advice. Instead, visit a financial consultant 1) to ensure that you have explored all of your financial options; 2) to ensure that you make complete disclosure and to determine your personal exposure so that nothing comes up later; and 3) to ensure that the best possible deal is negotiated with the Ontario trustee in bankruptcy.

    If you have a financial problem and need help, please contact DebtCare Canada at 888-890-0888 or visit www.debtcare.ca.

  • Get Out of Debt Canada

    Even though the economy seems to be rebounding, the average Canadian household debt load continues to grow. People across the country are still relying heavily on credit for a great number of their normal purchases, and many are finding it harder and harder to pull themselves out of this dangerous cycle.

    The stats on Canadian debt are unprecedented. A recent report from the CBC stated that the average unsecured consumer debt load jumped 4.6 percent in the third quarter of 2012 – the average amount being $26,768. The debt to income ratio has jumped from 140 to 165 percent. For Canadians, the trend seems to be one of continued reliance on credit to the extent that many are opting to up limits and increase borrowing.

    This trend is becoming more and more problematic for those Canadians unable to meet minimum monthly payments. If monthly financial responsibilities exceed income, the results can be disastrous. This is why it has become increasingly important to get out of debt and take back control of your finances.

    An important thing to remember when you are thinking about how to get out of debt is that you don’t have to do it by yourself. The influx of companies offering debt reduction services is evidence of this. Many Canadians are turning to these companies to get out of debt. It is important though, even with new regulations being put in place, to make sure that the company you choose is one that has your best interests in mind.

    A good financial consultant is a great option for a number of reasons. An experienced, well-reputed financial consulting company can offer you solutions to get out of debt the right way. By offering you budgeting advice alongside various methods to get out of debt, a debt reduction company can give you the help that you need to get rid of your debt.

    Many Canadians worry that bankruptcy is the only option when drowning in debt – it isn’t. Instead, debt consolidation is a great solution for many Canadians, as is entering into a consumer proposal. Consolidating your various monthly payments into one, easily managed payment not only makes it easier to pay, but this can also reduce the interest. A consumer proposal, if accepted, can reduce your debt substantially, making it far easier to get out of debt much more quickly.

    Don’t keep ignoring your financial problems to the point that they take over your life. Instead, talk to a good financial consultant who can present the options available to help you get out of debt – before it is too late.

    It is time to get out of debt Canada. For more information about how to deal with your debt, please contact DebtCare Canada today by calling 888-890-0888 or visit www.debtcare.ca.

  • Debt Settlement Companies to be Regulated in Ontario

    After regulating industries like the collection industry and payday loans industry, Ontario is making a responsible move and will also be regulating debt settlement companies.

    Ontario made this announcement in January 2013. This regulation comes on the heels of an explosion of ‘debt reduction’ companies that charge up-front fees and will even collect money from consumers with the promise of settling debts in the future.

    The Ontario Government’s new regulations will include:

    1. Not allowing debt settlement companies to charge up-front fees when negotiating debt settlements.
    2. Limiting the amount that a debt settlement company can charge.
    3. Requiring that debt settlement companies are transparent and provide their clients with clear written agreements.
    4. Allowing a consumer to have a 10 day cooling off period in the event that the individual changes his/her mind.

    The Ontario Government has put out requests for consultation from the public, including from debt settlement companies themselves. We have long advocated for this kind of regulation. As a financial consulting firm committed to helping those Canadians struggling with debt, we have never charged up-front fees or made exaggerated claims to our customers.

    Debt continues to be a rampant problem in Canada with many consumers turning to credit to balance the shortfalls with the ever rising cost of living and transportation in major city centres.

    The idea of regulating debt settlement companies is not restricted to Ontario. It is an idea that is spreading across the country. Stated in the press release issued by the Ontario Government was the fact that Alberta, Manitoba and Nova Scotia have also introduced regulations with respect to debt settlement companies.

    Here are some other sobering facts that the Ontario Government included in their press release:

    1. Average consumer debt in Ontario is up to $25,447 in the second quarter of 2012, compared to $24,721 in the second quarter of 2011.
    2. For every dollar Canadians earn, they have $1.64 in unsecured debt (Statistics Canada).

    These figures substantiate why there are more than 20 debt settlement companies already operating in Ontario. Perhaps while the Ontario Government looks at regulating these 20 debt companies, they should also take a look at reducing the fees and interest rates that credit card, loan and payday loan companies are allowed to charge which often results in consumers needing financial help.

    There are systemic problems in this country and unfortunately the ones who always seem to get the short end of the stick are consumers.

    It is the consumers who are drowning in debt and then finding themselves in the offices of debt settlement companies looking for relief. These are the same consumers who (depending on their choice of debt settlement company) may also end up in a debt reduction program that doesn’t make sense or whose fees are sky high.

    So regulate, regulate, regulate we say! We support any effort on the part of the Ontario Government to see Canadian consumers get fair treatment.

    For more information about debt settlement companies or if you have a debt problem and need help, please call 416-907-2582 or visit www.debtcare.ca.

  • How to Deal With a CRA Tax Debt Before The CRA Catches Up With You

    Tax debt can be terrifying; terrifying because owing the CRA money when you can’t pay will most certainly result in collection action. Tax debt is one of the main reasons people get behind filing income tax returns. Individuals get behind filing because the money to pay isn’t there and they fear that once the returns are filed the CRA is going to come looking for the money.

    If you have a tax debt or know that you will once you file late returns, don’t wait until the CRA catches up with you. You can beat them to the punch and get a plan together that will effectively deal with your tax debt.

    You see, you have more options to deal with a tax debt when the CRA has not begun enforcement action. A great example is homeowners who have tax debt. If you own a home, have a tax debt and the CRA puts a lien on your home, this will greatly reduce your options if you really cannot repay them monthly because the CRA will become a secured creditor.

    There are many financial options to effectively deal with tax debt. Look at a consumer proposal for example. By leveraging a consumer proposal you can freeze the interest accruing on your tax debt, potentially reduce the size of your tax debt and stop collection action such as a wage garnishment.

    The challenge is that your chances of being able to make a consumer proposal are greatly reduced once the CRA has taken enforcement action, secured through a lien on your home for example.

    The same is true for bankruptcy. If you were holding the bankruptcy card in your back pocket or hoping that filing for bankruptcy might seem like a way to get out of the tax debt, this too would no longer be a viable option once the CRA becomes secured on an asset like real-estate.

    The faster you deal with a tax debt the better. Never mind issues like enforcement action and financial planning; the existence of a tax debt and CRA collection action against you can result in damage to your relationships with your family or with lenders like your bank or mortgage holder, embarrassment at work and even health problems if you become stressed and have difficulty coping with your stress.

    You don’t have to put yourself through this. There are companies that can help you with your financial tax debt problem. Choosing the right solution for you can be easier said than done, but not if you know your options. Working with a financial consultant hired by you to represent your best interests is one excellent way to review your options and formulate your plan.

    Dealing with your tax debt before the CRA catches up with you will enable you to breathe a sigh of relief and move forward on a fresh footing.

    For more information about how to deal with a tax debt or if you have a tax debt and need help, please call DebtCare at 416-907-2582 or visit www.debtcare.ca.

  • The Truth About Canadian Payday Loans

    Canadian payday loans are a controversial topic and while they are now regulated in Ontario they still continue to be the reason that many consumers run into severe financial problems.

    Canadian payday loans are a type of credit product that is very easy to get. Whether you have good credit or bad credit, if you are employed with a paystub you can get a payday loan. Canadian payday loan companies will not pull your credit report and the loan is granted based on your income. Payday loans are short term loans that have to be repaid in full from the first paycheque that the client receives after receiving the payday loan.

    Here is how Canadian payday loans work:

    1. The Canadian payday loan company will give you a loan based on your income. Some Canadian payday loan companies will lend you up to 100% of your income on a given pay period. For example, if you earn $1000 bi-weekly you can borrow up to $1000.
    2. The payday loan company will charge you to borrow the money until your next paycheque – the charge is usually large and a $1000 payday loan for 2 weeks could bear a charge of $100-$250.
    3. On your next paycheque (still following the $1000 example) you would owe $1100-$1250 even though your paycheque is only $1000.

    Many, many people find that when a payday loan comes due the loan cannot be paid in full, resulting in a default, rolling over the payday loan, or taking out another payday loan.

    If you default on Canadian payday loans, the situation can get very embarrassing very fast. The Canadian payday loan company will not hesitate to call your employer, may fax notice to your employer, may send you to collections, or worse, sue you.

    If you roll over a $1000 payday loan that costs you $150 bi-weekly to borrow, at the end of 6 months you will have paid $1300 in fees on a $1000 loan, which is more than the amount of the original loan.

    If you take out multiple payday loans you could end up owing more in fees on payday loans than you earn.

    This is a dangerous cycle, and if you are drowning in Canadian payday loans you have to break the cycle. You can get rid of Canadian payday loans but the method you use to do so will greatly depend on your personal financial situation, how many you have, whether or not you are in default and more.

    Speaking to a consultant who knows how to deal with payday loans is a sound way to get both good advice and put plan together. Once you deal with your Canadian payday loans the key is to never take them out again!

    For more information about Canadian payday loans or if you need help to get rid of Canadian payday loans please visit www.debtcare.ca or call 416-907-2582.

  • When to Use Online Financial Calculators

    Technology has brought us so many online tools for financial planning; there are online financial calculators for literally everything. Mortgage financing/refinancing, debt reduction, car payments, interest, and budgeting are all things that online financial calculators can help manage.

    Online financial calculators are very useful when planning anything from a new mortgage to calculating the interest that you are paying on credit cards. Of all the online financial calculators, mortgage calculators can be used for the most diverse range of financial calculations.

    What’s really cool about mortgage calculators is that you can use them to not only calculate monthly payments on a mortgage but also on loans.

    If you have a lot of debt for example, here is how you can use a mortgage calculator to create different financial scenarios if you were to consolidate:

    1. Input your total debt into the mortgage calculator.
    2. Set the term and amortization to 5 years – this will give you an idea of what it would take to get you out of debt within 5 years.
    3. Calculate your payment based on an approx. interest rate that you believe best reflects the average interest rate that you would pay if the bank gave you a loan to consolidate your debt. A general rule of thumb would be to use 10%-15% if your calculation is based on a bank’s loan rate.
    4. Now do the same calculations with the interest rate set to zero.

    Completing the above steps will enable you to see how much you would have to pay monthly if you were to consolidate debt at zero percent interest vs. full interest.

    One risk though when it comes to using online financial calculators is that calculations may not be accurate once the time comes to seek out a credit product or debt solution that fits with the estimates that you have calculated. For example, what if you have made a calculation based on being out of debt in 5 years but then your bank offers you a line of credit? A line of credit may leave you with a low minimum monthly payment, but may take much longer than your estimate to pay off because it is like having one giant credit card.

    If you are using online financial calculators to try to come up with financial solutions because you are in debt, sometimes it makes sense to use them with the guidance of a financial professional/consultant.

    Hiring your own financial consultant can enable you to have a professional review your budget, credit and finances, and then work with you to use online financial calculators to build some viable debt consolidation scenarios. A financial consultant will likely have the resources to help you put your plan into motion.

    For more information about online financial calculators or if you need help dealing with your debt, please call DebtCare at 416-907-2582 or visit www.debtcare.ca.