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  • Collection Agencies and The CRA – Do You Know Your Rights?

    Collection Agencies and The CRA – Do You Know Your Rights?

    When you owe money, whether to a creditor or the Canada Revenue Agency (CRA), this knowledge can be stressful. If you can’t pay and are being contacted regarding the debt, that stress is likely to increase tenfold. However, there are limits, and if a collection agency or the CRA is becoming more aggressive than you’re comfortable with, know that you have rights and are protected.

    Collection Agencies

    Collection agencies in Ontario are regulated by the Consumer Protection Act and their activities must adhere to certain guidelines.

    Before any contact occurs, a collection agency must first send you a written notice through regular mail notifying you of the person or business that says you owe them money, the amount you owe, the name of the collection agency and a statement that the creditor has asked them to collect the debt. Only after this has been sent can you be contacted, and not for at least 6 days after the notice has been sent.

    Here are some of the things a collection agency can’t do:

    • Contact you on a Sunday, except between 1 pm and 5 pm
    • Contact you on any other day of the week between 9 pm and 7 am
    • Contact you on a holiday
    • Use threatening, profane, intimidating or coercive language
    • Use undue, excessive or unreasonable pressure or harass you
    • Charge you any fees

    If you feel as though your rights have been violated by a collection agency, you have every right to file a complaint. You can find out more information about your rights and how to file a complaint here: https://www.ontario.ca/page/filing-consumer-complaint.

    The CRA

    The CRA is considered very different from collection agencies. That being said, their activities must also follow a strict set of guidelines. They are required to treat you with respect and integrity, and there is an entire Taxpayer Bill of Rights which outlines the rights of individual taxpayers when dealing with the CRA.

    Some of these rights include:

    • The right to privacy and confidentiality
    • The right to service in both official languages
    • The right to be treated professionally, courteously, and fairly
    • The right to complete, accurate, clear, and timely information
    • The right to lodge a service complaint or request a formal review without fear of reprisal

    The entire Taxpayer Bill of Rights, as well as the steps to take if you feel your rights have not be respected, can be found here: http://www.cra-arc.gc.ca/E/pub/tg/rc17/rc17-12-16e.pdf.

    At DebtCare, we often receive calls from individuals requesting information about their rights as far as collection agencies and the CRA are concerned. No matter what, you should never feel harassed or disrespected. If you’re currently dealing with a debt that is being enforced, we can help you better understand the various solutions.

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

  • Toronto Housing Market Cooling? Now’s the Time to Get Mortgage Financing Locked Down

    Back in April, after much discussion and prompting from outside sources, the Ontario government instituted several measures to cool a continually hot Toronto housing market. These measures are an attempt to temper rising prices which are becoming more and more prohibitive for the average Canadian and to reduce the impacts of a potential crash.

    As noted in a recent CTV News article, “the 16-point Fair Housing Plan to tame the Greater Toronto Area’s expensive real estate market, including measures such as expanded rent control and a foreign buyers’ tax,” has already had an impact.

    Furthermore, back in June, the Toronto Real Estate Board reported that “active listings in the GTA surged 42.9 per cent from a year ago and sales plunged 20.3 per cent in May compared to the same time last year. Although the average selling price for all properties for the month of May was $863,910, up from $752,100 last year, it was still down from $919,614 in April, according to the real estate board.”

    The data suggests that a cooling has already started and is likely to continue. With the market cooling, now’s the time to think about getting mortgage financing locked down.

    Why? As it currently stands, the Toronto housing market supports high home values. However, if it continues to cool and home values fall, homeowners will have less home equity to take advantage of.

    This is a particularly sensitive issue for those considering refinancing to consolidate debt – an option which has become very popular with the current housing values. More equity typically means more access to funds in order to consolidate, and often a better interest rate.

    Moreover, if Canadian interest rates continue to rise, and thus mortgage payments rise, more equity may not necessarily cover what you need it to.

    If you want to borrow money, borrowing while the market is high is your best bet. As mentioned, if the market cools significantly and that equity is no longer available, or the interest rate increases again, you may have fewer options to deal with the debt.

    A second mortgage is a great way to borrow against your assets without the penalties associated with breaking your first mortgage. If you’ve been considering a financial move to strike while the iron is still hot, don’t take too long to do so.

    At DebtCare, we can help you discover how to make your home work for you.

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

    Source: CTV News, “Cooling measures already affecting hot Toronto housing market: survey,” http://www.ctvnews.ca/business/cooling-measures-already-affecting-hot-toronto-housing-market-survey-1.3473582.

     

  • What a 1% Increase in Interest Rates Would Mean to Canadians

    We’ve been hearing reports for months now that the Bank of Canada is likely to raise the Canadian interest rate in the coming months, and just a few weeks ago it finally happened. As it stands, Canada’s interest rate is sitting at 0.75%. The previously low rate made it possible for many Canadians to enter a turbulent housing market that continues to grow. However, amidst speculation that the rate could be set to rise again in the near future, many are questioning their ability to hold steady financially.

    What many Canadians don’t realize is that a 1% rate increase, for example, does not signify a 1% increase in payments. The reality is far more troublesome. In fact, a 1% rate hike could actually result in a 10%+ increase in mortgage payments. For instance, if you have a $200000 mortgage, at 3% interest, you’re paying $6000 in interest per year. However, if that rate increases to 4%, the interest grows to $8000 per year, which means you’re actually paying 33% more.

    A recent study done by Manulife Financial highlights how worrisome an increase to interest rates could be for a large portion of Canadian homeowners. According to the study, nearly 75% of Canadian homeowners interviewed said they would have difficulty making their mortgage payments if those payments were to increase by more than 10%.

    A further 38% said they could handle a mortgage payment increase of between 1 and 5% before they would have financial difficulty, while 20% said they could sustain an increase between 6 and 10%, and an additional 14% said that any hike would be a problem.

    As you can see, the study highlights just how unprepared many Canadians are if their debt repayment responsibilities were to increase.

    Furthermore, the Manulife survey found that millennial homeowners would be in the most trouble. This group would have the most difficulty, with 45% saying making their mortgage payment would become impossible within three months or less if the primary income-earner in the family were to suddenly become unemployed.

    If these numbers are cause for concern, perhaps you’re best served by examining the options to reduce or realign your current debt. For example, refinancing your mortgage to consolidate debt while interest rates are still low can significantly reduce your monthly payments and make even a 10% increase far more manageable. With housing prices high, this results in significant equity, meaning refinancing is usually far more feasible. If housing prices drop, this equity will also drop.

    With interest rates already going up, there’s no telling what’s to come. If you’re worried that a further rate increase could drastically impact your financial situation, don’t wait – get things sorted now while the market is still in your favour.

    At DebtCare, we can help you discover how to best situate yourself for financial stability.

    Call us today to discuss a solution: 1 (888) 890-0888.

     

    Source: The Huffington Post, “Canadian Homeowners Would Be Screwed By 1% Interest Rate Hike: Poll,” http://www.huffingtonpost.ca/2017/05/24/canadian-homeowners-rate-hike_n_16782802.html.

     

  • Tax Debt: Are You Self-Employed but Haven’t Filed Yet?

    Tax Debt: Are You Self-Employed but Haven’t Filed Yet?

    tax debtWe are well into July now and that means, if you are self-employed, your tax filing deadline has passed.

    If you filed on time, great, you’re set for another year. However, if you’ve yet to file, for whatever reason, you may be facing some serious penalties and a significant tax debt.

    Many people don’t file because they know they will end up owing and can’t pay or don’t have proof to support various write-offs.

    Often these individuals put off filing until the money to pay can be amassed (whether or not this is a realistic goal), while others choose to hold off in the hopes that the Canada Revenue Agency (CRA) will not be made aware of the transgression. Trust us, they will find out.

    The CRA is often the most aggressive when it comes to trust monies and tax debt. So, if you’ve collected HST all year, but didn’t file by the deadline, and thus have not declared or submitted these trust monies, the CRA is going to come in search of those funds.

    The CRA charges a late filing penalty of 5% of your balance owed plus an additional 1% for each month your return is late.

    As long as your return was filed by the June 15th deadline, you don’t have to worry about these penalties. However, you still have to worry about interest.

    Interest is charged on any unpaid balances at the established rates which are set by the CRA on a quarterly basis.

    Although your tax return is due on June 15th, interest will start to accrue the day after the personal tax filing deadline (April 30th). That means, whenever you do decide to file, if you owe, those penalties will be applied retroactively.

    Once the CRA is made aware of your debt, that’s when things can really start to get ugly. Although it is not illegal to owe a tax debt to the CRA, and thus prosecution is not a consequence, collection enforcement action is.

    Garnishments of your income, a frozen bank account, even a tax lien may be in your future.

    Our goal here is not to scare you.

    If this is the situation within which you currently find yourself, you’re probably already concerned and are looking for tax debt consolidation. Our goal is to impress upon you the importance of dealing with tax debt as soon as possible.

    Ignoring the problem will never make it disappear. It will actually just make things worse.

    If you’ve held off filing your taxes because you know you won’t be able to make the necessary payments, we can help with tax debt relief. At DebtCare, we have years of experience helping Canadian self-employed individuals and small business owners tackle troublesome tax debts.

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

     

  • Don’t Help the Canada Revenue Agency Take Collection Action

    If you owe money to the Canada Revenue Agency (CRA), you can be sure that the next few months will find you dealing with various attempts to collect. The CRA is quite aggressive when it comes to collecting a tax debt, and waiting for you to pay up just isn’t the name of their game. Don’t make it any easier for them to begin collection action.

    If you receive a legitimate communication from the CRA asking for financial information, you may think that providing such would be harmless or may prove favourable when attempting to negotiate a payment plan. For example, if an agent calls and asks where you bank, or who your clients are (if you’re self-employed), you may feel like this is a reasonable request and provide the information.

    The same goes for forms they may ask you to fill out. While you might think that completing these forms will result in a fair payment arrangement – they may even allude to such – it typically won’t.

    Think those questions are risk-free or safe? Beware. This information will be used for collection action.

    What questions lead to enforcement action?

    • Where do you bank = frozen bank account
    • What is your address = property lien
    • Where do your work = wage garnishment
    • Who are your clients = garnishment to clients, up to 100%

    Aren’t these things the CRA already knows, or can find out on their own? Sometimes yes, sometimes no, but even in the case of things they can find out, why do the legwork for them, thereby making it easier for them to hurt you?

    When you can’t pay, but you’ve answered the questions and filled out the forms, the CRA now has all of the information they need to come after you. The CRA isn’t interested in long-term payment plans and they won’t reduce the amount that you owe! Any arrangement will disallow payments to other creditors (loans and credit cards), thereby decimating your credit, as well as other expenses. If money is owed, the CRA wants it, right now.

    If the CRA is asking questions and you know that you owe but can’t pay in full, it is time to get professional representation. We strongly recommend that you DO NOT complete these forms or answer any financial/personal questions without first speaking with a financial professional.

    At DebtCare, we can help you navigate the dangerous CRA waters.

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

     

  • Who Does a Bankruptcy Trustee Represent?

    While bankruptcies and consumer proposals are two common practices for Canadians looking to deal with problematic debts, they can also be somewhat confusing or misunderstood. One of the most common misconceptions comes with regard to who a bankruptcy trustee represents. This blog aims to clear the confusion.

    In the simplest terms, a personal bankruptcy in Canada is a legal process whereby a bankruptcy trustee is appointed to administer your estate and distribute any assets to your creditors. With a consumer proposal, a financial calculation is done based on your income and assets and a proposal is put forth to your creditors based on a sum that you would pay back. In this case, a trustee administers the proposal with your creditors.

    While it may sound, in both circumstances, as though they represent you, the reality is more complex.

    A trustee is a legally appointed official, regulated by the government. They are required to represent all parties involved, namely the debtor and the various creditors. This means that, while the trustee does represent you, they are also required, by law, to represent your creditors as well. Their job is to administer your estate to ensure all parties are satisfied.

    Another issue arises with regard to payment, specifically in the case of a consumer proposal. With a consumer proposal, since a bankruptcy trustee is paid based on the size of the proposal (the total sum to be repaid), there is some motivation to obtain a higher payout from you.

    Since a bankruptcy trustee is the only person who can legally administer a bankruptcy or consumer proposal in Ontario, you can’t remove them from the equation. However, you can obtain your own representation to help you work through the process, a person who will help protect you and your assets. A financial consultant can examine your current financial circumstances, determine, in consultation with you, your financial abilities as far as repayment, and help structure the negotiation with the trustee to ensure the best possible deal. Furthermore, working with a financial consultant will give you access to the trustees they’ve worked with in the past, ones they know to be trustworthy.

    Our aim here is not to disparage bankruptcy trustees. There are many reputable, trustworthy trustees out there willing to do their best to achieve a satisfactory solution for all involved. However, it is always smart to have your own representation. Just as you would never head to trial without a lawyer, the same should be said for this financial situation.

    If you’re considering bankruptcy as a debt solution, DebtCare is the best place to start.

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

     

     

  • Happy Canada Day from DebtCare

    Happy 150th Birthday Canada!

    Enjoy the Canada Day celebrations with family and friends, check out some fireworks and fill up on some great food! All the best on this momentous national occasion!

  • Demographic Shift? Worsening Income Inequality in Ontario Leading to Higher Rates of Insolvency

    Bankruptcy has, for decades, proven to be an incredibly important resource for those Canadians struggling to meet their monthly obligations, and for good reason. It provides a fresh start when things have become too difficult to handle, providing significant relief from overwhelming debts and reducing the overall amount a person is required to repay.

    That being said, worsening income inequality is making bankruptcy far more common a solution for certain segments of the population. Insolvency rates in Ontario are rising. The economy is making it more and more difficult for those in certain situations to meet rising costs. Who is filing most often? Seniors, millennials and single parents.

    According to a study reviewed by the Globe and Mail, seniors over the age of 60 account for 12% of insolvency filings, whereas those under 30 account for 14%. Single parents were also disproportionately represented in the findings. While single-parent families account for about a fifth of Canadian families, they represent 43% of households with dependents who file.

    For millennials, student loans are a big part of the problem, as is the tough job market. Tuition costs have risen across the country, making it harder and harder for the average Canadian student to obtain a diploma or degree without some debt following them off campus. According to Statistics Canada, the average full-time undergraduate student is paying nearly $6,400 in tuition for the 2016-2017 school year, compared to about $4,400 a decade ago. That’s a big difference. Where is the money coming from? Most often from student loans.

    For seniors, or those looking ahead to retirement, debt is rising (and thus the number of bankruptcies), often thanks to a desire to help their children enter this incredibly turbulent housing market or pay for those sky-high tuition fees.

    Another problem for both millennials and single parents struggling to make ends meet is the dreaded payday loan. With advertisements claiming loans for as little as $1, many heads are turned in the belief that payday loans are the answer for quick cash. However, these have proven to be quite devastating because they quickly become almost impossible to pay off.

    With income inequality continuing to make it harder for certain demographic groups to live without debt, bankruptcy represents an important debt solution that can narrow the gap. If you’re looking to take advantage, just remember to speak with a financial consultant first to secure your own representation, before heading to a trustee in bankruptcy. Since bankruptcy trustees represent both you and your creditors, it is best to have someone with you who has your back.

    At DebtCare, you are our first and only concern. If you’re looking for more information about bankruptcy, please get in touch with us today: 1 (888) 890-0888.

     

  • How to Stop a CRA Wage Garnishment

    With the tax season behind us, those sitting with tax debts may be concerned about payment plans and what actions the Canada Revenue Agency might take to obtain money owed. A CRA wage garnishment is a very common form of enforcement action. If you’re concerned about a possible garnishment, or are currently trying to have one removed, read on.

    The CRA does not need a court order to obtain a wage garnishment. They do not even need to warn you when one is being initiated. They can garnish up to 50% of employment income and 100% of other income, such as contracts and pension income, simply by sending a letter to your employer or clients (if you are self-employed).

    Once a CRA wage garnishment is in place, it becomes even harder to negotiate with the CRA. Often the only way they will agree to remove it is by receiving payment in full.

    If this is not feasible, don’t worry, you have other options.

    To get a garnishment lifted, you may want to consider bankruptcy or a consumer proposal. Once either is filed, the garnishment will be stopped immediately.

    In the case of a consumer proposal, your creditors must accept it to move forward, so if the proposal is not accepted, the garnishment can be re-initiated. However, a strong, well-positioned proposal will most often be accepted.

    In a bankruptcy, a wage garnishment will be stopped, period. There is no need for creditors to accept anything. Once the paperwork has been filed, all enforcement action must cease.

    Knowing which option is best for you depends on your personal circumstances – your income, assets, family composition, debts and more. Discussing your situation with an experienced financial consultant is the most effective way to determine which option will serve you best, both in the short-term and over time.

    Tax debts can’t be ignored – they won’t just disappear on their own, and the CRA can be incredibly aggressive when it comes to collecting. The most important thing that you can do when you have a tax debt is look for a solution as soon as possible. Waiting may just find you struggling to make ends meet. A wage garnishment can be embarrassing and can seriously impact your ability to continue meeting your monthly financial obligations.

    If you are stressed about a current or probable CRA wage garnishment, DebtCare can help. We have years of experience helping Canadians with such problems.

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

     

  • Paying Off OSAP: Student Loans, Consumer Proposals and You

    When you’ve studied tirelessly and spent years working towards that well-earned degree or diploma, the last thing you want to think about once you graduate is the debt that accumulated in your quest to obtain it. Unfortunately, student loans are unique in their formation, particularly OSAP loans, and so today we attempt to clear the waters. Today we’re talking student loans, consumer proposals, and how you can finally get yourself back on stable financial ground.

    As you’re no doubt aware, depending on the years spent in post-secondary academia and the amount of funding you borrowed in order to get that coveted piece of paper, student loan debts can become quite large. Typically, when you’re studying, and thus paying interest only, or, in the case of an OSAP loan, nothing at all, the debt may not seem like a big deal. However, once you graduate and are required to start paying it back, with interest, things can become very challenging, very quickly.

    A consumer proposal has become a very valuable resource for those looking for relief from debt that has grown to overwhelming proportions. Consumer proposals are great because, in addition to stopping interest and combining the various payments into one manageable monthly payment, a proposal typically results in an overall reduction of your total debt. However, there are certain things you need to know with regard to OSAP loans and consumer proposals.

    First things first: the only way to clear an OSAP loan if you have not been out of school for 7 years is to pay it in full. If that 7 year period has not passed yet, a consumer proposal (CP) won’t result in a reduction of that debt, and once the CP is over you’ll still be required to pay it. That being said, even if it isn’t reduced, a portion of your proposal payment will go to the OSAP loan in addition to your other creditors.

    On that note, if you are facing enforcement action as a result of the OSAP loan, a consumer proposal will stop it, even if you have not been out of school for 7 years. This is an important consideration if your wages are being garnished or your bank account has been frozen.

    On the other hand, if an OSAP loan is over 7 years old – meaning you’ve been out of school for 7+ years – you can include it in a consumer proposal. This means, in addition to the other debts you’ve accumulated, the overall OSAP loan will likely be reduced.

    So, to summarize, if collection action has commenced prior to the 7 year date, a consumer proposal will stop all enforcement action. You will be required to pay the loan in full, but you will have some relief, especially when your other creditors are included in the proposal. If you’ve been out of school for more than 7 years, you can include it as you would any other debt.

    At DebtCare, we know how difficult it can be to deal with student loans. Often a consumer proposal represents your greatest opportunity for relief. Want to discuss your options?

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