debtcare.ca

Tag: Michael Goldenberg

  • Late Filing of Income Tax Returns – How Late is Too Late?

    With tax time right around the corner, some folks are already getting their receipts in order. Others however are not so concerned with filing their taxes on time because they are already late filing for previous years. If you find yourself in the latter group, you may want to think about changing your tax filing strategy.

    Late filing of income tax returns is a slippery slope, often with a snow ball effect. Unfortunately, those hardest hit with income tax problems are small business owners. This is for a few primary reasons:

    1. The owner doesn’t have the “know how” when starting out to keep solid records and when tax time comes he is lost.
    2. The owner doesn’t have the money when starting out to hire an accountant and instead tries to do the taxes himself and makes mistakes or gives up because he finds it too challenging.
    3. The owner spends trust monies, such as H.S.T., and doesn’t want to file because they will have to repay the money.
    4. The owner knows that there will be money owed but has no way to pay it.

    Here is the problem. It is not against the law to owe money to the Canada Revenue Agency. It is illegal to not file your tax returns. Like most problems, a tax problem with not go away by itself and will continue to grow over time.

    You see, the most common penalty that the Canada Revenue Agency uses to penalize a later filer is a financial penalty. First, when you file your tax returns late you will be subject to a penalty. This penalty will grow each time you repeat the offence. For example, if the first year you filed late was in 2009, the second year you filed late was 2010 and the third year you filed late was 2011 you would be assessed a late filing penalty in 2009, it would then be greater in 2010 and greater again in 2011. In addition, interest will continue to accumulate on the debt.

    Many individuals think that if they don’t file it will buy them more time to come up with a plan to pay the tax debt. This doesn’t work. Eventually, over time, employers file tax slips, your clients will file T4A income slips or declare the income paid to you as expenses and the CRA will be in a position to estimate your income. It is very common for the CRA to perform what’s called a “notional assessment,” which is essentially an estimate of what they believe you earned and the corresponding tax debt, interest and penalties that you should owe.

    Once this occurs the CRA will proceed with collection action against you, which could include a wage garnishment, freezing your bank account, contacting your clients, and more…

    If you have a tax problem, what you need is a financial plan. Your first step is to work with a financial consultant who specializes in tax debt to help you determine if in fact there is any way that you can reasonably pay your tax debt once your returns are filed. If the answer is one of the following: a) yes, in instalments; b) yes, if the interest was frozen; c) yes, if the amount of the debt was reduced; or c) no, I simply can’t, then believe it or not there are financial solutions to help you deal with your tax problem, avoiding the stress and embarrassment of having the CRA come after you. You have to make the decision to take the first step towards facing your past due returns and the tax debt you will owe if you want to have an opportunity to put your past due taxes behind you.

    For more information about what to do if your tax returns are past due or how to deal with a tax debt please contact DebtCare at 416-907-2582 or visit www.debtcare.ca.

  • Stopping Collection Action before the Holidays

    The holidays should be a time for joy and family, not a time to be stressed out about your finances and trying to deal with bill collectors. Bill collectors are employees of collection agencies, and it doesn’t matter to them what time of the year it is. If a bill collector has been hired to collect a debt he or she will proceed with collection action.

    When bill collectors begin collection action you may feel powerless to stop it. Stopping collection action is difficult, and before you can do it you have to educate yourself about what types of collection action are legal. You also need to have a plan to deal with the debt. This way, when you begin taking steps towards stopping collection action, you have something to propose to your creditors to satisfy them so that you can enjoy your holiday without worrying about your debt.

    Generally speaking, the number one tactic that collection agencies deploy is communication. They will communicate with you by phone and by mail. The agency may call you several times per/day, in the evenings and on the weekends. For those of you who live or work with others who don’t know about your debt, this can be very embarrassing.

    Some collection agencies have paralegals on staff and have the ability to sue you. In this case, stopping collection action can become even more difficult because the court is involved. With that being said, it is possible to stop collection action being taken against you, even if the collection agency has sued you on behalf of your creditor.

    Certain communication from collection agencies is acceptable, while other forms of communication are not. Excessive phone calls, leaving personal information on voicemail or threats are all tactics collection agencies are not allowed to use when collecting a debt. Collection agencies in Ontario are regulated by the Ministry of Consumer Services. On the Ministry of Consumer Services website you can learn about your rights and even lodge a complaint if you believe that a collection agency has violated them.

    Now, if you have debt that has gone to collections you cannot ignore it. While you may be able to stop some collection actions, the debt will not simply go away. Owing that money is not the only thing to think about, as collection action can have long-term implications on you and your family. You need to have good credit these days because everyone checks credit. Having bad credit and debt can impact your ability to get a job, buy a home and even open a utility account or bank account.

    There are programs available which are effective at stopping collection action, even if the collection has a judgement against you or plans to or is garnishing your wages. These programs can also help you get rid of your debt and rebuild your credit. This is why it is so important not to ignore your debt over the holidays and look for ways to deal with it once and for all.

    By working with a good financial consultant, you can have your credit and finances reviewed to see what options are available to you and you may find that you can start the New Year collection free.

    For more information about stopping collection action and how to deal with your debt please contact DebtCare by visiting www.debtcare.ca or call 416-907-2582.

  • Rent-to-Own is Investing in Real-Estate and The Home Buyer Too – Find Out What You Need to Know Before Renting to Own

    Investing in real estate is not how it once was. Recent changes to CMHC lending guidelines have made it increasingly difficult for individuals and families to purchase homes. In the past year, Canadians have seen CMHC reduce maximum mortgage amortizations from 35 years, to 30 years, and most recently down to 25 years. They have also tightened up other lending guidelines and reduced the number of products they will high ratio insure. This has forced those who have considered investing in real estate by purchasing a home to live in or to resell to come up with innovative ways to make the financing happen.

    To make the dream of homeownership a reality, some real estate investors and builders have come up with rent-to-own programs that enable families to begin their dream of home ownership by renting with a later option to own. Generally people who opt for rent-to-own do not qualify with the bank for traditional mortgage financing because they cannot get approved for CMHC high ratio mortgage insurance due to problems with credit, income and debt.

    Most real estate investors and builders offer rent-to-own programs to provide homeowners with a stepping stone. The homeowner begins by renting the home with the expectation that later they will be able to qualify for a mortgage to own it. When a real estate investor or builder agrees to offer rent-to-own financing they are not only investing in real estate but they are also investing in the borrower too. Real estate investors and builders who offer rent-to-own programs do so to help give people the ability to buy homes. The faster the borrower can fulfill the rent-to-own contract and buy the home, the better.

    A big challenge that people face when renting to own because of credit, income or debt problems is that once in the home, they are faced with the question of how they will improve the state of their credit and finances so that they can qualify for conventional mortgage financing in the future. Well, if they are in a financial pickle, they likely will not be able to get out of it without some financial guidance.

    The fact of the matter is that where credit is concerned, most people can obtain mortgage financing with 2 years of good credit after having cleared up past bad credit. Generally, CMHC will want to see that whatever problem credit existed is paid off and that there are 2 years of rebuilt credit. CMHC will also want to see that debt servicing ratios are in line with their guidelines and that the individual is not loaded with debt.

    Clients who decide to go the route of rent-to-own should not do so without a strong financial plan; a plan that will see that all credit and finances are in order before looking to obtain conventional mortgage financing is critical. Where real estate investors and builders are concerned, when we say that investing in real estate means investing in your client, we mean that when you take a risk on someone, it is prudent to give them all of the tools and resources necessary to be able to fulfill the end agreement.

    Rent-to-own can be a great resource to leverage when pursuing home ownership, especially when combined with a solid financial plan at the get-go.

    DebtCare Canada works with many real estate investors, builders, and consultants who offer rent-to-own programs to put their clients back on a path to financial wellness. We work with clients with all types of credit and incomes, and can assess your clients to give both you and your clients a financial opinion as far as where they are today financially, as well as providing you with a plan to see that they can improve their circumstances. Many real estate professionals have found our services to be very valuable because they also help to identify clients who have deeply rooted financial issues that may need to be considered when making lending decisions.

    For more information about the programs offered by DebtCare Canada please call Michael Goldenberg at 416-907-2582 ext 102 or visit www.debtcareservices.ca/real-estate.

  • Credit Card Payment Calculator – How Long Will it Really Take to Pay off Your Credit Cards

    You likely stumbled upon this article looking for an online credit card payment calculator or for information about using a credit card payment calculator because you are looking to calculate ways to pay off your credit card debt. There are many different debt and credit card payment calculators out there but seeking one out at this point may not make sense. Having too much credit card debt can present a big problem and paying it off can be difficult. Assessing your true ability to pay off your debt and estimating the time it will take to do so involve many considerations.

    Each credit card will have a different interest rate, so unless you have the ability to use a single credit product to pay off all of your credit cards, in essence consolidating your debt, you may find using a credit card repayment calculator inaccurate because of the varying interest rates and credit terms.

    Consider using the credit card payment calculator that exists in your own head. Here are some very simple credit card payment calculations that you can use to get an idea of how long it will take you to pay off your credit card debt.

    How much would it cost you per/month to pay off your existing debt over 4 years at 0% interest? Take your total debt and divide it by 48. E.g. $20,000 debt divided by 48 months would mean it would cost you $416 per/mo. to pay off your debt at 0% interest over 48 months. Now that you know this number, let’s look at the interest rates you are paying on your credit cards.

    Interest rates on credit cards generally range from prime to $29% (Lines of credit are usually prime to 10%, regular credit cards from 15%-23%, department, furniture and department store credit cards are usually from 24%-29%). Credit card interest compounds monthly which means that each month, one month’s interest is applied to the bill.

    The biggest problem with credit card interest and paying off credit card debt is the amount and frequency of the interest coupled with the fact that minimum monthly payments are set very low, usually 1% to 3% of the credit card balance. You will notice that banks will now tell you on your bill the number of months it will take you to pay off your credit card debt. I had a client show me a credit card statement for a Visa with a 19.9% interest rate which indicated that it would take the client 96 months to pay it off at the minimum payments.

    Here’s why. If you took that same $20,000 credit card debt in our first example and made it a single product at 19.9% interest, your minimum monthly payment would likely be $200-$300 per/mo. To calculate the monthly interest that would be applied to the credit card, all we have to do is take the interest rate of 19.9% and divide it by 12 months (remember it compounds monthly). In our example, that would make the monthly interest 1.66%. Now multiply the $20,000 by the 1.66% and presto, the monthly interest would be $320. That means on your monthly billing date $320 would be added to the credit card, making the balance $20,320. Even if you make a $300 payment, you owe more than you started with, which is why credit cards are so difficult to pay off. To pay off credit card debt in a reasonable time period you would have to double or triple your minimum payments.

    Before playing around with the numbers using a credit card payment calculator take a step back and be realistic about your situation. How much money can you apply in addition to minimum monthly payments? Is it realistic that you will be able to pay off your credit card debt without restructuring it? Are you finding it difficult now to even manage your minimum payments?

    Figuring out how to deal with credit card debt will involve closely analyzing your budget, cash flow and resources to come up with a solution. There are some debt restructuring programs available that can freeze or even reduce the amount of debt you owe and offer you a single monthly payment. The best thing that you can do is seek out financial counselling if you are struggling with a financial problem. By working with a financial specialist who focuses on debt consolidation and financial restructuring you can access the programs and resources that are available to help you get out of credit card debt.

    If you would still like to use a credit card payment calculator, click here to use DebtCare Canada’s online credit card payment calculator. If you have a financial problem and need help, please contact DebtCare at 416-907-2582 or visit www.debtcare.ca.

  • Is a Consumer Proposal a Debt Consolidation Loan?

    When looking for a solution to a financial problem or accumulated debt, you will find that there are many services available that offer different things. Banks and finance companies traditionally offer debt consolidation loans, while trustees in bankruptcy deal with debt through bankruptcies and consumer proposals.

    Debt consolidations involve consolidating debt into a single payment and debt consolidation loans have very similar characteristics to consumer proposals. A consumer proposal involves a proposal being made to your creditors wherein you agree to repay a portion or all of your debt through a single, fixed monthly payment.

    A consumer proposal is much like a debt consolidation loan because:

    • You begin owing a fixed sum of money.
    • You begin making a single monthly payment.
    • You can pay it off at any time.

    Some of the benefits that are offered through a consumer proposal that are not offered by debt consolidation loans are that in many cases a consumer proposal will reduce the overall debt owing, will stop collection action, will freeze the interest accruing on debts, and more.

    One of the drawbacks of filing a consumer proposal vs. taking out a consolidation loan is that it will impact your credit and your relationship with your creditors. Because creditors are not being paid according to the original terms of your agreements with them when accepting less than what they are owed and/or being repaid over a longer period of time, they will not likely do business with you in the future. In addition, the consumer proposal will be reported on your credit report for 3 years from the date it is paid in full.

    Now, one must weigh the impacts on credit against getting out of debt. If you owe so little debt that you could pay off all of your creditors in 3 to 4 years and have good enough credit to get a debt consolidation loan, then a debt consolidation loan may be the right answer. However, a consumer proposal may be the best answer if:

    • Your credit is already damaged to the point where you cannot get a debt consolidation loan, or;
    • You have so much debt that you cannot consolidate it all, or;
    • You have so much debt you just can’t see a way to pay it off in a reasonable amount of time.

    When it comes to making a choice with respect to how to deal with your debt it is important to recognize that each person’s financial situation is different. A debt consolidation loan or consumer proposal may not be the right answer for you at all. The best thing that you can do is consult a financial counsellor/consultant to perform an unbiased review of your finances, give you some practical advice, and provide the resources and representation to see your plan through.

    For more information about consumer proposals and debt consolidation loans or if you need a debt consolidation please contact DebtCare Canada at 416-907-2582 or visit www.debtcare.ca.

  • Consumer Proposal VS. Bankruptcy – How Are They Different

    If you have been facing financial challenges you may have been exploring financial options to deal with debt. Two of these options include a consumer proposal and bankruptcy. We are often asked the differences between filing a consumer proposal vs. bankruptcy in Canada, which prompted us to write this article.

    Before discussing the differences between filing a consumer proposal vs. bankruptcy it is important to understand that both are legal processes to deal with debt that are administered by a trustee in bankruptcy. The trustee in bankruptcy is an officer of the court appointed by the Superintendent of Bankruptcy who oversees the Bankruptcy and Insolvency Act and regulates the insolvency professionals who administer it.

    The trustee in bankruptcy administers bankruptcies and consumer proposals; they do not represent you in the process. One of the trustee’s responsibilities is to make a fair deal that pays your creditors the most money possible. Trustees also earn more money based on the size of the consumer proposal that you file. The larger the payments you make under the consumer proposal they negotiate, the more money they make administering it.

    A bankruptcy or consumer proposal is a viable method to use to deal with debt. Both will stop most collection action, will leave you with a single monthly payment, and will stop the interest accruing on unsecured debts.

    When comparing the differences between filing a consumer proposal vs. bankruptcy the option you choose will generally depend on your income and assets. Those with minimal income, no assets and a significant amount of unsecured debt may be a better candidate for a bankruptcy. One big drawback with bankruptcy is that, if your income surpasses a certain level, your trustee may assess you as having surplus income. Having surplus income means that, if your income exceeds the threshold, not only will your monthly payment in bankruptcy increase but the trustee may also require that you remain bankrupt longer. The same applies to equity in assets, such as a home. If you have equity in your home the trustee will assess surplus income which will increase the amount that you have to repay in bankruptcy. This is why higher income earners or those with assets often opt for consumer proposals.

    Many individuals don’t realize that in a bankruptcy or consumer proposal you can generally keep your assets, homes or cars included.

    Consumer proposals involve offering your creditors a proposal that includes a sum of money that you will repay as a final settlement on your debts. Consumer proposals are based on your income, cash flow, and the ability to make a monthly payment over 4 to 5 years. Some benefits of a consumer proposal include:

    • It can be paid off early – a bankruptcy can’t.
    • It is a final agreement – bankruptcies will continue until your bankruptcy trustee discharges you. If your income increases, it could increase the amount you have to repay in your bankruptcy and the length of time that you are bankrupt.
    • You can rebuild credit sooner – consumer proposals are removed from the credit report 3 years after they are paid in full, bankruptcies stay for 6 years from the date you are discharged.
    • In the case of a higher income earner or individual who has assets, a consumer proposal will involve a smaller monthly payment than bankruptcy.
    • If the majority of your creditors accept the consumer proposal, your other creditors are automatically included whether they like it or not.

    When investigating the differences between filing a consumer proposal vs. bankruptcy it is best to speak to an independent financial professional who can guide you through your options and represent you throughout the process. Bankruptcy trustees are shrewd negotiators and have experience filing these every day. Having your own representation can help to ensure that you get the best deal. The fact that a bankruptcy or consumer proposal may not be your only financial option is also important, which is why an independent and objective financial opinion will help you to make more informed financial decisions.

    For more information about filing a consumer proposal vs. bankruptcy or if you need help with a financial problem, please contact DebtCare Canada at 416-907-2582 or visit www.debtcare.ca

  • How to Get Tax Relief from Back Taxes

    Back taxes can be a nightmare and if you have back taxes, there is no doubt that you could use tax relief. Trying to get tax relief from the CRA directly is very difficult. There are financial programs available through DebtCare Canada to achieve tax relief on your back taxes. In this short video, Michael Goldenberg, president of DebtCare Canada, discusses how you can get tax relief from your back taxes. This is a must see!

    If you would like more information about how to get tax relief from your back taxes contact DebtCare at 416-907-2582 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.

  • Debt Consolidation Companies in Canada

    DebtCare Canada is a financial consulting company in Canada that helps Canadians consolidate debt and achieve financial relief. Before contacting debt consolidation companies, consider DebtCare. Watch this short video where Michael Goldenberg, president of DebtCare Canada, discusses the services and solutions offered by debt consolidation companies in Canada including DebtCare Canada.

    If you need more information about debt consolidation companies in Canada or need a debt consolidation, please contact DebtCare at 416-907-2582 or visit www.debtcare.ca.

  • CRA Income Tax Debt and how it Affects Small Business Owners

    It’s tough to be a small business owner. Many small business owners really struggle the first few years that they are in business. When trying to build up a business there can be times where the business does well and times when it does not. Where sole proprietors are concerned their business income is almost one and the same as their personal income. While a sole proprietor can write off business expenses, the revenue that is left must be declared as personal income on her CRA income tax returns.

    Small business owners, especially sole proprietors are the group that is by far the most at risk of running into trouble with the Canada Revenue Agency. Small business owners may not have the revenue at the beginning to afford bookkeeping services and often do not plan from the “get go” to set aside money to pay their Canadian income tax debt. It is sometimes hard to estimate what one might earn in a year and CRA income taxes are usually due on an annual basis. Tax time can be shocking to small business owners because not only is it more expensive for an accountant to prepare returns for an individual and a business but small business owners sometimes underestimate what they will actually have to pay.

    One very common example of where small business owners can run into trouble with the Canada Revenue Agency is when they collect HST on behalf of the government. HST is trust monies that must be paid to the CRA and often small business owners will remit their HST on an annual basis. Time and time again we have seen small business owners who don’t set aside their HST money because they are certain that they will be able to pay it when the time comes to file their CRA income tax return. If the business is not doing well when tax time rolls around, coming up with the money to pay the HST may be a more difficult prospect than what they anticipated.

    At this point usually one of two things will happen; the small business owner will miss his or her filing deadline fearing what the CRA will do when they process the HST return and then learn that the small business owner doesn’t have the money to pay or he or she might look for expenses to reduce the amount of HST owed. The latter is where huge problems can happen. Aggressive tax preparers may be able to make your income tax return result in an amount that you feel you can pay, however this can land you in big trouble if the CRA decides to look into your books.

    The worst thing small business owners can do if they are worried about their CRA income tax debt is fail to file or manipulate their books. Both actions are illegal and can create a legal problem beyond the financial problem they would have had, had they filed their returns on-time and  transparently.

    No one goes into business wanting to have problems with the Canada Revenue Agency but it happens. Bad things happen to good people and usually tax problems don’t escalate because the person intentionally set out to create them.

    The most important thing to do if you are a small business owner who has a tax problem is face it and work with a financial consultant to get your finances straight. Financial consultants are not tax preparers and are able to look at a business’s finances to come up with a strategy to help the  business deal with its CRA income tax problem.

    For more information about CRA income tax debt and how it effects small business owners or if you are a small business owner who is in trouble please visit www.debtcare.ca or call DebtCare Canada at 416-907-2582.