debtcare.ca

Tag: financial problem

  • Can a Collection Agency Issue a Wage Garnishment?

    deb1It is a very common scenario: you’re aware of the existence of a bad debt, but with no means to pay the debt, you instead choose to ignore the calls and notices and hope that you can eventually amass the funds to pay it in full – or just hope that it will eventually go away. Then payday rolls around, and with the intention of taking even just a little bit aside to pay the debt, you find that the creditors have already taken matters into their own hands and issued a wage garnishment – and the amount on your paycheque is far lower than expected.

    If this is the position in which you’ve found yourself, you might be wondering how it even came about. Can a collection agency even issue a wage garnishment – how do they have this power? The ugly truth is that yes, although a collection agency is a third party, it does have the power to secure a wage garnishment when going through the proper channels.

    When you have a debt that you can’t pay, and a creditor assigns the account to a collection agency, that agency may just choose to pursue the matter in court – in order for a garnishment to be leveraged against you, obtaining a judgement in court is first required.

    Does this mean you are being sued? No, the only people who can sue in Ontario courts are lawyers, paralegals, and people representing themselves – meaning, if a creditor has the time and resources, they could choose to sue you. Many don’t, but will pass the matter along to a collection agency, one who will then seek a judgement.

    A collection agency can apply on a creditor’s behalf to court to seek a “garnishment” against you. If granted, this legally allows them to seize your salary, money in your bank account, or other money you own to repay your debt.

    Often when collection agencies threaten to sue on behalf of the creditor, it is to scare you into paying – but there are many instances where it is not an empty threat and a wage garnishment may be imminent.

    If collectors are calling and delivering these threats, a wage garnishment may be headed your way. It is best to deal with the debt before a garnishment is issued, thereby mitigating further damage to your already bruised credit.

    These are your options:

    • Pay the debt in full – although if this really was an option we hope most would have already done it.
    • Make a settlement with the collection agency – sometimes this works, other times it is easier said than done.
    • Look at other options to settle the debt and stop collection action, such as filing a consumer proposal.

    Once a debt goes to collections it won’t just go away – your creditor will just keep assigning it to different agencies and using different tactics to force you to pay.

    If you are standing on a ledge with seemingly no resources at your disposal, don’t despair. DebtCare Canada can help you find a solution to your financial problem and get a wage garnishment lifted before it does more damage. Call us today at 1-888-890-0888.

     

  • Debt Relief in Canada Blog Series Part 2 – Do I Qualify to Refinance My Mortgage?

    Debt relief in Canada can involve a debt settlement, a consumer proposal, budget management, credit counselling, bankruptcy, debt consolidation and more. The right option for debt relief will depend on your personal and financial situation and also the resources you have available to you to deal with your debt.

    A homeowner with home equity has more options for debt relief in Canada than one who doesn’t, as that individual can leverage his or her home equity to consolidate debt. A homeowner who uses his or her home to consolidate debt can save greatly on interest because mortgage interest is significantly less then credit card interest. With that said, there have been many changes to Canadian Mortgage and Housing Corporation (CMHC) guidelines in the past couple of years, so it is not as easy as it once was for homeowners who need to consolidate to do so. This has left many homeowners wondering “do I qualify to refinance my mortgage?”

    In the past, CMHC insured lines of credit and debt refinancing up to 95% of the value of an applicant’s property. CMHC no longer insures lines of credit, and will only insure a refinancing of up to 80% of a property’s value. Also, those who want to qualify for a mortgage through the bank that is insured by CMHC must have good credit and meet both the bank and CMHC lending guidelines.

    You may be thinking that you have a lot of debt, that you have missed some payments, or that the bank has already turned you down for a mortgage refinancing to consolidate debt, leaving you to beg the question how can I qualify to refinance my mortgage. If you have equity in your home, you still have options for debt relief in Canada through refinancing your home. There are many private lenders, credit unions, private financial institutions, mortgage investment corporations and finance companies who will offer mortgage financing to people who do not qualify with the bank.

    This is because they will give more merit to the amount of equity in the home as it provides them with more security when considering a higher risk applicant. Generally speaking, to be approved for mortgage refinancing based on the amount of equity you have in your home, your new mortgage (which includes the amount that you borrow on your home in addition to your existing mortgage) should not exceed 75% of the value of your home now.

    The entire process to refinance your home can take up to a month to complete. First, your financial consultant will have to review your finances to see if you qualify to refinance your mortgage. Once it is determined that you qualify, you will make a formal application. Upon approval of the application, if your mortgage is not CMHC insured, the mortgage lender will request an appraisal of your property. This step alone can take a week to complete. Once your appraisal has been completed and your property value has been verified, you will have to provide any documentation that is required in connection with your mortgage approval and sign the mortgage documents. At this point the mortgage will go to a lawyer and the final mortgage closing documents will be prepared. This step can take two weeks or more. Finally, you will sign all of the mortgage documents with the lawyer and your mortgage funds will be advanced.

    If you think you may have too much debt and need debt relief, it is important to act before a financial problem emerges. Because the process to refinance your mortgage takes time, it is important to consider this as well as your other financial options before your debt continues to accumulate, or before you run into problems managing your payments (if you haven’t already).

    For more information about options for debt relief in Canada or to see if you qualify to refinance your mortgage please call DebtCare at 416-903-4000 or visit www.debtcare.ca.

  • Why You Should 100% Be Represented in a Consumer Proposal Canada!

    If there is one way to get out of debt it is through a Consumer Proposal Canada. Listen up! This is not a process you should go into unrepresented. Watch this short video by Michael Goldenberg, President of DebtCare Canada, where he discusses why going to a trustee directly for a consumer proposal can have big financial consequences. A Consumer Proposal (Canada) is a great idea if you have a financial problem, but there is a lot of information you need to know before doing so, and DebtCare Canada can help to educate and represent you through the process.

    If you would like more information about making a consumer proposal (Canada) contact DebtCare at 416-907-2582 or visit www.debtcare.ca.

  • Wage Garnishments in Canada – How to Stop a Garnishment on Your Wages

    Thousands of Canadians have their wages garnished each year. In the past few years there have been more instances of individuals having their wages garnished because of the turbulent economy. Wage garnishments in Canada occur when one party believes that another party owes him or her money and pursues enforcement action.

    Wage garnishments in Canada are generally issued in one of three ways.

    The first most common reason a wage garnishment is issued is when a debt is owed to the government and the individual is unable to make a satisfactory, voluntary repayment arrangement. Some examples of this are: tax debt owed to The Canada Revenue Agency or The Minister of Finance or a debt owed to the Province and/or Federal Government for an unpaid student loan. If the government wants to place a garnishment on your wages, they don’t have to obtain a court order to do so. If you want to know how to stop a garnishment on your wages, the answer is pretty much black and white. You either have to make an acceptable voluntary repayment plan with the government so that they agree to lift the garnishment on your wages or participate in a Federal Government program to seek debt relief. Wage garnishments that are issued by the government can be applied at up to 100% of your wages.

    The second most common reason that a wage garnishment is issued is when one party sues another party in the Superior Court of Justice and is awarded judgement. Once awarded judgement he or she can apply to garnish the individual’s wages. A common occurrence is when an individual defaults on a debt to a creditor and then the creditor sues him or her in the Small Claims Court. When a wage garnishment is issued through the Small Claims Court in Ontario your wages can be garnished up to 20% of your net earnings. If you want to know how to stop a wage garnishment issued by the Superior Court you have three choices. Make a voluntary payment plan arrangement with the party who sued you where they agree to lift the wage garnishment, to make a motion to the Court offering a voluntary payment plan and asking that the wage garnishment be set aside, or by applying to a Federal Government program for debt relief.

    The third most common reason wage garnishments are issued is as a result of child support arrears. If you want to know how to stop a wage garnishment for child support arrears you have only one choice and that is to apply to the Court to have it removed. This can be very challenging to accomplish. A Federal Government program will not stop a wage garnishment for unpaid child support.

    The fastest most effective way to stop a wage garnishment is through a Federal Government program. The benefit achieved by leveraging a Federal Government program to stop a wage garnishment is that the garnishment will be stopped, interest will be frozen, in many cases you can have the principal amount of the debt that you owe reduced and make a voluntary monthly payment.

    Participating in a Federal Government program will require that you include all debt that you owe. If you have debt to other creditors like credit card providers, loan providers, unpaid cell phone bills etc., these debts will also be covered under the Federal Government program. This will mean that they too will have their interest frozen and in many cases the principal debt reduced. In the event that you had several debts you would make a single monthly payment under the Federal Government program.

    If you are having a financial problem and your wages are being garnished it could lead to increased financial hardship. You don’t have to suffer and there are options available.

    For more information about wage garnishments in Canada and how to stop a garnishment on your wages please contact Michael Goldenberg at DebtCare Canada by calling 416-907-2582 or visit www.debtcare.ca.

  • What is a Trustee?

    What is a trustee? A trustee is a person who holds property, authority, or a position of trust or responsibility for the benefit of another. In the case of an “estate trustee” the trustee could be a company or an individual. An estate trustee in the case of an individual who dies or is incapacitated,  represents the deceased or the incapacitated individual.

    There are other types of trustees though in specific matters that have different responsibilities and are appointed by the government to administer an estate according to legislation.

    What is a trustee in bankruptcy? In Canada, a trustee in bankruptcy is an individual or a corporation licensed by the Superintendent of Bankruptcy to hold in trust and, subsequently, to distribute bankrupt’s property among the creditors in accordance with the Bankruptcy and Insolvency Act (BIA). The bankrupt and all other persons holding the bankrupt’s property must transfer the property to trustee until he or she can determined how the estate shall be administered. “Property” includes income and assets. The trustee may also assist individual in preparing and submitting a consumer proposal to creditors.

    Where an “estate” trustee would act to carry out the intent of the deceased or in the best interest of the incapacitated individual, a “bankruptcy” trustee acts in the best interest of the bankrupts creditors and it is his or her obligation to recover as much money from the estate as possible for the benefit of the creditors.

    In Canada, consumers and businesses often find themselves confused, pondering the question “what is a trustee?” and many get the impression that the trustee in bankruptcy represents their best interests. This is because so many trustees aggressively advertise to people who have financial problems. They do this because they aren’t profitable unless they have individuals and businesses approaching them to file for bankruptcy or to file consumer proposals. These advertisements often promote debt solutions, debt settlements and debt help. When you visit the trustee he or she will often only offer one of two choices: a bankruptcy or a consumer proposal. Inevitably the question is who does the “debt solution” benefit in the end?

    In the case of a bankruptcy the trustee is paid a “tariff” a “fee” from the proceeds of the bankrupt estate. In the case of a consumer proposal the trustee receives remuneration based on a percentage of the amount of the consumer proposal that he or she negotiates.

    When you visit the trustee he or she will require that you provide complete disclosure of your income and assets. If the trustee determines that a consumer proposal is the only legal remedy to your debt, he or she will then determine the amount of the consumer proposal based on your ability to make monthly payments over 4-5 years. For example, if you owe $20,000 and the trustee determines that you can afford to repay your creditors at 100 cents on the dollar, on a monthly basis over 5 years then the amount of the consumer proposal will be $20,000, 100% of the debt owed. If the bankruptcy trustee determined that you can only afford to repay $13,000 over 5 years then your consumer proposal would be 65% of the debt owed. The challenge is that the smaller the consumer proposal, the less remuneration to the trustee, which provides an incentive to the trustee to arrange larger proposals. In addition and as we mentioned earlier the trustee is required by law to secure the greatest amount of repayment possible for the benefit of your creditors.

    It is for this reason that approaching a trustee directly to discuss your debt can be a risky proposition. In the past 5 years, this has spawned new industry: debt consulting. Debt consultants are familiar with the BIA and are able to evaluate your estate to help you determine which option is right for you and they can even negotiate on your behalf with bankruptcy trustees.

    This provides the insolvent person or debtor with a number of benefits.

    1.      Because the debt consultant is hired by the debtor, he or she represents the debtor`s best interests, not the creditors.

    2.      The debt consultant can interpret financial information and often negotiate a better deal than the consumer or business would have achieved had they visited the trustee directly.

    3.      The debt consultant can request evaluations of assets like homes and vehicles to ensure that the trustee does not over-estimate an asset resulting in you paying more in a consumer proposal or bankruptcy.

    4.      The debt consultant can work with you to come up with a financial plan to rebuild your credit and finances after a bankruptcy or a proposal.

    A bankruptcy or proposal offers many benefits and can provide a person who has a financial problem with immediate debt relief, including stopping collection action like a wage garnishment. Like anything else, researching a solution to a financial problem is truly “buyer beware” and if you are considering an avenue for debt relief like a bankruptcy or consumer proposal, we do not recommend that you do so unrepresented.

    For more information about a trustee in bankruptcy or if you are struggling with a financial problem please visit www.debtcare.ca or contact Michael Goldenberg at DebtCare Canada by calling 416 907-2582 for more information.

  • What is a Consumer Proposal in Canada? Pro’s and Con’s

    Individuals and businesses in Canada are very fortunate to have many options available to them should they run into financial problems. One option that many individuals and businesses with unmanageable debt choose is a consumer proposal.

    What is a consumer proposal in Canada? Well, a consumer proposal is a legal option mandated by the Federal Government. It enables consumers and businesses to settle debt at much less than they owe, freeze interest and make a single monthly payment that is disbursed to their creditors.

    Generally, a consumer proposal becomes an option when individuals or businesses are bringing in much less income than they were at the time they took out credit. This could occur due to job loss, disability, divorce, or loss of contracts or business. Another scenario where a person may consider a consumer proposal is when he or she has racked up a lot of debt and is only making minimum monthly payments with no reasonable ability to pay off the overall debt. The common denominator is that debt has become unmanageable and the individual or business that is in debt needs debt relief.

    The single biggest “con” as it relates to a consumer proposal is the myth that it will hurt an individual’s credit. A consumer proposal will remain on an individual’s credit report for 3 years from the date it is paid in full. This is a non-issue where the party has already begun defaulting on money owed to creditors because he will have likely already damaged his credit for a long period of time. When an item goes into default on an individual’s credit, it will remain there for 6 years from the date it is paid in full.

    Consumer proposals offer many “pros”. First, a consumer proposal provides debt relief. Once a consumer proposal has been accepted, all creditors must stop any enforcement action being taken. Enforcements actions like frozen bank accounts and wage garnishments will be stopped immediately.

    Second, a consumer proposal involves settling debt for less than what was originally owed. Third, consumer proposals enable the individual or business who files to make a single monthly payment that is much less than what they had been paying prior to filing the consumer proposal.

    Trustees in Bankruptcy administer consumer proposals. This can pose a challenge because trustees act for the creditors involved in the proposal, in addition to the individual or business who is filing it. They are compensated based on the size of the consumer proposal they negotiate. These two factors can often result in the individual or business filing the consumer proposal not getting the best deal.

    How do you know that a consumer proposal is the best option to deal with your financial problem? There is no easy answer to this question. The right answer to your financial problem will depend on your personal circumstances. Determining the right choice will involve a detailed review of your assets, liabilities and budget.

    Financial consultants and debt counsellors who routinely arrange consumer proposals will be able to perform this review and because you pay them, you will be assured that you are receiving impartial advice and not a sales pitch. It may end up that a consumer proposal isn’t the best choice for you.

    For more information about this article topic “What is a Consumer Proposal in Canada” or to receive a review of your financial situation contact Michael Goldenberg at DebtCare Canada by calling 416 907 2582 or visit www.debtcare.ca

  • Why do Debt Counsellors Charge a Fee for Debt Help in Ontario?

    Debt counsellors are not “not for profit” credit counselling agencies and are actually a form of financial consultant. This often gets misconstrued because credit counselling agencies promote debt help in Ontario; what is not known is the fact that they are largely funded by the major banks and are often not the right choice if you are struggling with a financial problem.

    Debt counsellors represent individuals and businesses that have problems managing their debt. They do charge a nominal fee for their services because they are not funded by anyone else. They represent you exclusively in whatever choice you make, as it relates to strategizing a way out of debt.

    When you visit a debt counsellor to get debt help in Ontario, she will review all of your financial information. This includes your income, assets, liabilities and budget. She will provide you with many scenarios for you to choose from, all designed to help you deal with your debt. These scenarios could include a new budget, a debt consolidation, a debt settlement, consumer proposal or, where necessary, a bankruptcy.

    Due to the fact that they do not administer bankruptcies and consumer proposals  the way Bankruptcy Trustees do, they will not recommend bankruptcy or a consumer proposal as an option unless it is absolutely necessary. Bankruptcy Trustees only make money if you file a bankruptcy or consumer proposal. In the case of a bankruptcy, they are paid a tariff out of the proceeds of the bankruptcy. In the case of a consumer proposal, they are paid a percentage of the consumer proposal. If you qualify for a consumer proposal or bankruptcy, they will arrange it for you; however, that doesn’t necessarily mean it is the best choice for you. It means that it is the only choice they can offer you based on the tools they have available to them.

    Debt counsellors charge a fee for debt help in Ontario because they will do a considerable amount of work while representing you and ensuring that you make the right choice for your situation. Bankruptcy Trustees do not represent you; they are officers appointed by the Superintendent of Bankruptcy to administer bankruptcies and consumer proposals. Their mandate is to administer a bankruptcy, ensuring that the creditor receives as much money as possible. While they may appear to represent you, because you sign your final paperwork with them and grant them legal status, they in fact are acting in the best interest of your creditors.

    This brings us to the next reason that debt counsellors charge a fee for debt help in Ontario. If it happens that a consumer proposal is the best choice for you, there are two major reasons that you benefit from being represented by a debt counsellor:

    1.       In the case of a consumer proposal, the Bankruptcy Trustee gets paid based on a percentage of the consumer proposal that they arrange for you. The more they can negotiate for you to repay your creditors, the more money they will earn. This means that you may not always end up with the best deal. A debt counsellor will help to negotiate lower consumer proposals in many cases. Lower than what you would have been offered had you gone to a Bankruptcy Trustee directly, which could save you thousands!

    2.       A Bankruptcy Trustee will almost always try to get you to file a consumer proposal, even if you also qualify for bankruptcy. In a bankruptcy, your creditors receive much less money and so does the Trustee. If they present you with a consumer proposal as an option, as opposed to a bankruptcy, they make more money. The problem is that if in fact you are insolvent, you will inevitably end up having problems making the payments required by the consumer proposal. The payments will last for a much longer length of time when compared to a bankruptcy.

    At the end of the day, if your debt has become unmanageable, it makes complete sense to obtain a financial opinion and even representation from an unbiased party. One who understands the world of finance in depth, thereby ensuring that you make responsible financial choices that protect your wallet.

    If you would like more information about why debt counsellors charge a fee for debt help in Ontario or if you are struggling financially, please contact Michael Goldenberg at DebtCare Canada by calling 416-907-2582 or visit www.debtcare.ca