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  • Going Debt Free: Consumer Proposals in 1-2-3

    A consumer proposal is a legal avenue for dealing with debt. Over the last few years, this has become a very popular option for Canadians looking to deal with financial challenges. Today, in an effort to help you better understand this option, we get back to the basics with consumer proposals. Read on to learn more.

    Firstly, what exactly is a consumer proposal? It starts with a proposal to your creditors based on an amount that you can reasonably pay back. This amount is based on a trustee’s assessment of your financial information.

    The majority of your creditors must accept the proposal, and proposals have a very high success rate if structured properly. If accepted, you then begin to make single, monthly payments to a trustee for a term of 4-5 years. As soon as the proposal is filed, any enforcement action against you will be stopped, interest stops and often the proposal will involve you repaying less money to your creditors than the total debt initially owed.

    While the term of the proposal may be 4-5 years, the consumer proposal can actually be paid in full at any time. This is a great benefit. Over time, many individuals experience financial positioning changes and once paid in full the consumer proposal will be removed from your credit in 3 years which means that you can rebuild quickly. This is important, as a consumer proposal will negatively impact your credit. However, if you’ve decided that a proposal is the best course of action to deal with your debts, your credit has likely already taken a hit.

    Who can administer a consumer proposal? Only a trustee in bankruptcy has the ability to file a consumer proposal. That being said, while it must be administered by a trustee, most people negotiate their consumer proposals through an independent financial consultant. Why? Because in a proposal the trustee represents both you and your creditors – so their role is to get your creditors as much money as possible in the proposal. Seems like a bit of a conflict of interest, no? We agree, especially because the trustee makes a percentage of whatever the settlement is – the more you pay, the more the trustee gets paid. That’s why we suggest seeking out your own independent advice before speaking with a trustee.

    At DebtCare, we can offer the advice you need to best protect yourself in a consumer proposal. Have questions or want to find out more about the benefits or get started?

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

     

  • How to Stop a CRA Wage Garnishment Before the Holidays

    The Canada Revenue Agency (CRA) does not take a break during the holidays. If you owea tax debt and have not yet made arrangements to pay the debt, don’t think you’re safe from enforcement action just because it’s the “most wonderful time of the year.” The CRA is aggressive and to them it matters little if it’s May or December. To help you out, today we cover how to stop a wage garnishment before the holidays.

    Whether the CRA has already levied a wage garnishment or you are concerned that one may be headed your way, here are some things you need to know.

    Firstly, the CRA can garnish up to 50% of employment income and up to 100% of other types of income, such as your pension. Additionally, unlike other creditors, they do not need a court order to do so; they simply send a notice to your employer and your employer is legally obliged to comply.

    Think you’ll have fair warning? Think again. The CRA does not need to provide you with notice of an upcoming wage garnishment.

    Once a wage garnishment is in place, the CRA becomes even more difficult to negotiate with.  So, knowing this, what are your options?

    Obviously the best option is to pay the tax debt. After all, the whole point of a CRA wage garnishment is to obtain the funds owed by you.

    If you can’t pay the debt, you may consider heading to tax court. Keep in mind that this is a very expensive option and the success rates are quite low. You will also need to retain the services of a lawyer and could be looking at several months before your case is heard.

    Another option is a consumer proposal. This is a negotiated settlement with your creditors (the CRA included) that stops the garnishment as soon as it is filed. It also stops interest and may reduce the total debt load that you are currently carrying. Like a consumer proposal, bankruptcy is another option to stop a CRA wage garnishment. Both of these need to be arranged by a trustee in bankruptcy, but be sure to acquire your own representation rather than going directly to a trustee.

    If you own your own home, refinancing may be another viable option to pay the tax debt. This will often reduce the amount of interest you are paying and will stop a garnishment. You will need to have decent credit though.

    All of the above are good options for dealing with a CRA wage garnishment. Which option is right for you? The best way to determine that is to speak with a financial consultant who knows about CRA tax debts and has the resources to help you negotiate.

    Want to see that wage garnishment lifted? Call DebtCare today at 1-888-890-0888.

     

     

     

     

  • Debt Consolidation Before or After the Holidays: When is the Right Time to Consolidate?

    shutterstock_524105263-1The holidays are fast approaching, and for many Canadian families, that means several weeks of juggling finances and using credit to finance holiday spending. This usually leads to financial stress, which can really put a damper on the seasonal festivities. This year, get a head start with a debt consolidation.

    When is the right time to consolidate? It is always best to start the New Year on fresh footing. If 2016 was a year where you accumulated a lot of debt, there are solutions – these solutions vary depending on the amount of debt you have and your personal circumstances. Know that any number of these solutions can help you deal with that stress from holiday spending.

    What options are available?

    Many people choose to use their home equity to refinance a first mortgage or take out a second mortgage to consolidate debt. This can provide a low monthly payment and involve interest rates far lower than what you are likely paying for credit cards. This is a very viable option that won’t have an overall negative impact on your credit score.

    What if you don’t have a home, or own a home but have no equity and are struggling to manage your payments? Or, what if you don’t have the credit necessary to obtain a traditional loan from a financial institution for a regular debt consolidation?

    Another option to consolidate debt is a consumer proposal. While a consumer proposal is not a traditional debt consolidation and does badly impact your credit score, it does involve a single, monthly payment that covers all of your debts (excluding your mortgage).

    In a consumer proposal, a settlement is negotiated with your creditors. If the majority of your creditors accept the settlement, there are many benefits:

    • A single, monthly payment and prefixed repayment term
    • Interest stops
    • In many cases your debt is reduced and your monthly payment is far less than what you were paying to your creditors
    • If your creditors have commenced enforcement action against you, such as freezing your bank account or garnishing your wages – this action will stop as soon as the proposal has been signed

    It can be difficult when facing financial challenges to know the right solution. A debt consolidation – whether through traditional channels or through a consumer proposal – is a great way to get things sorted out.

    The best thing you can do is work with a financial consultant who is independent and represents you. They can look at all of your financial information, present options and negotiate the solution that best suits your unique situation.

    At DebtCare, we can sit with you and discuss all of your options. Don’t let holiday spending stress you out. Get your finances figured out before the New Year and start 2017 off on the right foot.

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

     

  • Holiday Budget Planning: Tips to Keep The Season Cheerful

    holiday-budget-planningSo many of us are guilty of overspending during the holidays; the gifts, the outfits, the events, the food. All of this spending can quickly spiral out of control, turning what should be a joyous season into a stressful one. This is especially true if we start early and don’t keep track of what we’ve purchased. This year, keep the stress at bay with these holiday budget planning tips.

    Set a budget – and stick to it! This should always be the first order of business. Take a realistic look at your bank account and set a total that you can spend without setting yourself up for a massive bill once the holidays are over. Set an amount for each person you need to buy for and stick to it.

    A great way to do this is with the envelope system. Once you’ve set an amount, put that amount in an envelope with the receiver’s name on it. Once the envelope is empty, that person is done.

    Keep a list. All too often we buy, assume we are finished, and then see ‘that perfect gift’ that so-and-so just can’t live without. Trust us, they can. Keep a list of what you’ve purchased for each person, and consult it when you’re wondering if you have ‘enough’.

    Go DIY. Personal, hand-made items are often far more special than something purchased from a store. Take advantage of the countless boards on Pinterest and make some gifts. Just be careful, some DIY gifts are actually pretty costly, so just price out the items before diving in.

    Host a potluck. It isn’t just the gift giving that adds up around the holidays. Hosting a big party and providing food for all of your guests can get pretty costly. This year, instead of handling all of the food yourself, ask guests to bring their favourite holiday dish. This not only spreads the spending around, it may just open your eyes to new recipes to add to your cookbook!

    Start saving now for next year. Now is the time to start thinking about saving up for next year. Once the holidays end, start putting away even just a few dollars a week – once next November rolls around, you’ll have an impressive little nest egg from which to draw.

    Have a plan to deal with holiday debt. If you know that, no matter what you do, your budget won’t be able to handle the extra spending, and your credit will take a major hit, have a plan in place to deal with the debt.  Get in touch with a financial specialist to discuss all of the options available to you and get ready to start 2017 off on fresh financial footing.

    At DebtCare, we know how tough the holidays can be when money is a concern. Let us help.

    Get in touch today to find out about strategies to deal with debt before it gets any worse. 1-888-890-0888.

     

     

  • CRA Tax Debt Collectors Get More Aggressive

    shutterstock_445545787-1The Canada Revenue Agency (CRA) has always had a reputation for strict and aggressive collection behaviour. When money is owed, agents will try their hardest to retrieve it. This usually results in extreme stress on the taxpayer and enforcement action that can wreak havoc on their financial stability. What’s worse, those tactics seem to be getting more and more aggressive. If you’ve got CRA tax debt collectors calling, read on.

    When you receive an assessment, perhaps your initial thought is to call and speak to the CRA directly. When you try to negotiate with the CRA directly, before they even speak with you they will ask you to complete a financial disclosure form – this is a very dangerous form. They will want disclosure of everything from your bank account to your employer, to assets and income and expenses. Some of this information they may already have, or have the resources to obtain, but it is always easiest just to ask you.

    Remember, the goal of each and every agent is to get what is owed, as soon as possible. They are not interested in negotiating a long, drawn-out payment arrangement. Perhaps you assume that they will allow a realistic schedule based on your income. Oh, they will, but it will be based solely on your income – requirements to other creditors will not be considered, and your debt to the CRA will be made the top priority.

    Once this has happened, you will have little recourse. Since you’ve disclosed all of your information – where you bank, work, live, etc. – they can initiate enforcement action against you. This may include a frozen bank account, wage garnishment, even a lien on your home. Unlike other creditors, no court order is needed for CRA enforcement action, and once imposed it can be very difficult to remove.

    Our best advice is this: if you have received a notice of assessment/re-assessment informing you of a tax debt, don’t go directly to the CRA. You should consider speaking with a financial specialist to find out about all of the available options for getting rid of the debt before the CRA comes calling.

    If the CRA has already taken enforcement action, there are federal government programs that can protect your bank account and income. Speaking with a financial specialist, again, is the best approach here. We can help you take advantage of those programs and get rid of the tax debt once and for all.

    Protect yourself and your assets. At DebtCare, we can help you get rid of a CRA tax debt and help you retain your financial footing. Call us today at 1-888-890-0888.

     

  • Bankruptcy in Canada – Does Your Trustee Represent You?

    rsz_bankruptcy_in_canadaIf you are drowning in debt and considering a bankruptcy in Canada or a consumer proposal as a solution for debt relief, you may be thinking that the best approach is to go directly to a trustee. Many trustees advertise that they have a solution to your debt problem, and that is true, but are they acting as your representative? Therein lies the problem.

    Both a bankruptcy in Canada and a consumer proposal must be administered by a trustee – you can’t conduct or negotiate a bankruptcy on your own. Therefore, it is a common misconception that you should just go right to the trustee to get things started. We urge you to reconsider this path.

    Why? A trustee is a court appointed officer whose job is to act in your interest AND the interest of your creditors. That means that, although they do represent you, they also represent your creditors. You are not their priority – they are required to find an equitable solution that best suits all involved.

    Additionally, because you look at the trustee as your representative, you may share or present things to the trustee that will later be used against you or you may omit important information that will impact you later.

    For example, in a bankruptcy your monthly payment and the length of time you pay depend on an income calculation. If you err when providing information to the trustee, and the trustee later becomes aware of additional information, even after you have filed, the trustee can claim that you owe your creditors ‘surplus income’ and you will have to pay this money to the trustee before you can be discharged. This may also extend the amount of time you have to remain in the bankruptcy.

    This can get even more complicated when it comes to a consumer proposal. This is because, in a consumer proposal, the trustee is paid a percentage of the amount of the proposal. The more money your trustee can get for your creditors, the more money they receive. This scenario clearly does not place your best interests at the forefront.

    When you have a financial challenge, a bankruptcy or consumer proposal may be the solution – however, you are best served by speaking with a financial consultant who represents you before visiting a trustee. When you meet with a financial consultant who specializes in bankruptcy, that individual can help you structure your information to disclose what is relevant and can even propose the terms of your filing to the trustee. This is the best way to protect yourself.

    At DebtCare, we can help you get all of your information sorted before you speak with a trustee, protecting your interests the entire time.

    Give us a call today at 1-888-890-0888.

     

  • Canadian Consumer Debt News: $200 Increase Could Spell Disaster for Many

    We are continually on the watch for news about Canadian consumer debt and the impacts of certain market conditions such as interest rates and a booming housing market. This week is no different.

    Last week, the Huffington Post released this alarming article regarding debt levels, entitled “Canadian Debt Levels Would Crush Them If They Were $200 Higher Per Month: Survey.” Discussed within the article is a survey done by consumer insolvency firm MNP Ltd.

    The survey results leave much to be desired. According to the responses of the over 1500 Canadians, 56% said they are only a couple hundred dollars from a debt crisis.

    Another 52% said they are worried about their current debt levels, while half of the individuals surveyed said that they regretted owing so much money. An additional 38% said raising interest rates could leave them on the verge of bankruptcy.

    Check out the article in full here: http://www.huffingtonpost.ca/2016/09/28/canadian-debt-levels_n_12235290.html.

    If you find yourself reading the article and counting yourself among the group highly concerned about your current debt levels, it might be time to consider alternatives.
    At DebtCare, we know how important it is to feel financially secure. With the current economy and Canadian consumer debt levels sitting at all-time highs, don’t leave yourself vulnerable.

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

     

     

     

     

     

     

  • Financial Focus: Canadian Mortgage Interest Rates Have Nowhere to Go But Up

    rsz_mortgage_interest_ratesA few weeks ago, we came across a CBC News article which discussed a recent TransUnion survey, and the results of that survey were quite startling. We’ve spoken before about low interest rates and the fact that many Canadians have taken advantage, but it is clear that those low interest rates have nowhere to go but up. What are the potential impacts of a rate hike? The CBC article enlightened us.

    According to the article, “Almost a million Canadians wouldn’t be able to handle even a one percentage point increase in the interest rate they pay on their debts.” Even more alarming is the fact that over 700,000 of those individuals wouldn’t be able to meet their monthly financial obligations if the interest rate went up by as little as 0.25 percentage points. That’s a staggering number.

    While the TransUnion study does show “an overall healthy situation for Canadian borrowers, where the vast majority are staying on top of their debts and could withstand modest increases in the rates they pay on them,” if you believe yourself to be in the minority, this may be cause for more than a little concern.

    Are you financially prepared if a mortgage interest rate increase is announced in the near future? Could you continue to comfortably pay all of your bills, on time, even if one of those (probably the largest one) went up?

    If not, you may want to start thinking about how you can work on getting to a place where you could. Perhaps it would be prudent to use some of your home equity to consolidate debt while rates are at all-time lows and get some of those bills off the table.

    Want to discuss your options? DebtCare can help. Call us today: 1-888-890-0888.

     

  • Consumer Proposal or Debt Consolidation – Which Makes More Sense?

    rsz_consumer_proposal_debt_consolidationIn our experience, for those looking to get rid of their debt, there is often a lot of confusion surrounding the various options available. With so many different types of debt solutions available, it can be difficult to determine which option is the best. Today, in the hopes of providing some clarification, we discuss two such options: the consumer proposal and debt consolidation.

    A consumer proposal is a negotiated settlement with your creditors. This means that you offer to repay a portion of your debts and your creditors agree in order to receive at least a portion of what is owed. There are several benefits to this option. In a consumer proposal, all debt is consolidated into a single, monthly payment, there is no interest and often the debt is reduced.  The downside here is that your credit will be impacted. That being said, if you are in a position to seek a consumer proposal, your credit has probably already been affected.

    With a debt consolidation, you borrow money to pay off all of your debt. You then repay whomever loaned you the money, with interest, with a single, monthly payment. For example, many people choose to leverage their homes by refinancing their first mortgage or taking out a second mortgage to consolidate debt. With a debt consolidation, the monthly payment will usually be larger than it would be in a consumer proposal (since you are paying back all of what is owed as well as interest), but your credit is less negatively impacted.

    Which option is best? We can’t accurately answer that question here. Every person’s situation is unique and your personal circumstances will dictate which option is best for you.

    Buyer beware – when you’re struggling with financial decisions such as these, it is best to speak with a financial consultant for guidance to eliminate potential issues.  Remember, if you go to a bankruptcy trustee, they will usually offer up a consumer proposal as the best answer because that is what they sell. If you go to a bank, they will offer a traditional consolidation because that is what they sell. A financial consultant can advise you on the best option and negotiate the process for you. There is nothing being sold, so the bias just is not there.

    At DebtCare, our goal is to help you get out of debt – that could mean a debt consolidation, a consumer proposal or any number of other options. Our priority is your financial security.

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