Wednesday, 18 November 2015

In the News: Woman Decides to File a Consumer Proposal to Conquer High Interest CitiFinancial Loan

When stuck in a financial rut, with credit that may be less than stellar, many Canadians choose to turn, often out of necessity, to the alternative lending market, or payday loan companies, to meet financial obligations. Donna Border is just one example of this - and her story has made it to the Huffington Post.

According to a recent article, Borden’s story was brought to light thanks to a lender’s predatory behaviours which seemingly took advantage of the single mom. According to the article, thanks to her credit history, “Borden couldn’t qualify for a line of credit from a bank, which typically charges less than 10 per cent interest. She was forced to turn to the alternative lending market, where lenders operate outside of regulated financial institutions. She settled for a 28.99 per cent interest rate.”

This eventually resulted in Borden paying $25,000 on a subprime, $10,000 loan, at which point she said enough was enough and decided to fight back. Read all about her story here:

Unfortunately, Borden’s situation is not uncommon. Lenders price to risk, and this means that once there is more risk, rates go through the roof. So what happens when your financial obligations become too tough to handle and you think a loan is the only way to regain control?

As Borden and the thousands of others like her have learned, borrowing your way into more debt and higher interest credit products until you pop is not the best way to deal with debt.

Strong initial signs that you are running into credit problems:
-          You are making only the minimum monthly payments to your credit cards
-          You are getting payday loans to avoid having your credit pulled and to make ends meet
-          You owe more debt than you could reasonable afford to pay in full within 4 years

Filing a consumer proposal is a viable option for dealing with debt now – you don’t have to wait until everything is in default and collectors are harassing and humiliating you. It also has the added benefit of halting any enforcement action that has already been levied against you, and puts a stop to sky high interest.

As the article notes, predatory lending will not go away. The government has regulations in place, but they don’t make interest illegal until it reaches 60% and payday loans can charge up to a 21% fee to borrow for only 2 weeks. As long as there are people who are vulnerable because they have had financial problems and have fewer options, these lenders will continue to gouge consumers who believe they have no other options.

Filing a consumer proposal is an important debt relief option to consider when it comes to getting a fresh financial start. If your credit is making it hard to find relief, and you find even paycheque to paycheque living has become difficult, a consumer proposal may just prove to be your best bet.

To find out more about how filing a consumer proposal can help you rebuild, call DebtCare Canada today at 1-888-890-0888.

Wednesday, 11 November 2015

How to Consolidate Debt and Start the New Year Fresh

2016 is fast approaching, and that usually means setting goals for the year ahead and making plans to get certain things back on track. For many Canadians, this means taking a good, hard look at finances and often attempting to take control of unruly debt by consolidating it. Often the first thing people wonder when considering this option is how to consolidate debt to best suit their own needs.

There are different ways to consolidate debt depending on your credit, assets and cash flow. Each offers its own pros and cons. If you are considering debt consolidation to help start 2016 on fresh financial footing, here are a few of the most popular options:

Mortgage Financing

Mortgage financing usually means taking out an additional mortgage alongside the one you currently have.

·         Pros: One low payment, lower interest than a loan or line of credit.
·         Cons: Expensive closing costs, uses up equity, stretches out debt repayment over a really long time, harder to get for those with bad credit, home ownership a prerequisite.

Personal Loan/Line of Credit

This option usually involves heading to the bank or a private lender and taking out a personal loan or line of credit to consolidate.

·         Pros: Usually easy to get compared to a mortgage, not a long process, no upfront fees to borrow.
·         Cons: Generally higher interest rates, and if revolving can become a temptation that is hard to resist for many.

Consumer Proposal

·         Pros: One payment, no interest, stops collection action, reduces debt, often a lower monthly payment
·         Cons: Temporary impact to credit.


·         Pros: One payment, significantly less debt, stops collection action, no interest
·         Cons: Reporting obligations to the trustee, impact to credit, the amount to be repaid in bankruptcy can change – for example, if you make more money or acquire something the trustee can ask you to repay more surplus income.

When debt consolidation seems like the best route to take to re-establish your finances and achieve financial stability, these may be the options you consider. Each of these has some important advantages, and the choice will largely depend on your own circumstances and future goals.

Our best advice - get professional advice. A financial consultant with experience helping people regain their financial footing is the best person for the job - take advantage of their knowledge and expertise and get a plan in place that helps you achieve your goals.

Want advice you can trust? Call DebtCare Canada today at 1-888-890-0888. We can help you get ready for 2016!

Wednesday, 4 November 2015

We Speak Your Language. Having Some Financial Problems and Need Help? DebtCare Offers Services and Consultants that Speak Your Language

DebtCare Canada is proud to announce that we now offer services in a number of different languages. When you are struggling with your finances, language should not be a further hindrance to obtaining help.

We now offer financial services in English, Mandarin, Cantonese, Korean, Japanese and Spanish!

Use these links to find financial help in your language:


Need help with a financial problem? DebtCare Canada can help. Call us today at 1-888-890-0888.

Tuesday, 27 October 2015

Can a Collection Agency Issue a Wage Garnishment?

It 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.

Tuesday, 20 October 2015

Repairing Bad Credit – What to Do When Old Items Just Won’t Go Away!

When money is tight, and bills can’t always be paid, choosing one bill over another may seem like the lesser of two evils. What can it hurt, letting a bill go unpaid, then planning to pay it the following month? Then next month’s statement comes, and the amount owing has doubled, so you opt to pay it and leave a different bill unpaid. What originally seemed like a solid plan has quickly turned into a nightmare. When this is the case, repairing bad credit becomes incredibly difficult.

However, once you regain control of your finances, those items listed on the credit report should just disappear, right? After all, you are managing your money more effectively and not missing any bills. Unfortunately this isn’t how it works. This is especially true when items are sent to collections.

Evolution of an erroneous collection item on your credit report:

-You get behind with bills, and when bills are not paid monthly, these are reported to your credit report, causing trade lines for the credit product to go into default.

-Eventually that account is assigned to collections and a second item for the same debt is registered.

-Over time the account is cancelled with the collection agency and then assigned to another one, but the first one didn’t remove their item. The new collection agency now registers an item.

-Fast forward 7 years - when you would assume everything should be gone - but all 3 items are still on the credit report and it feels like they are impossible to get rid of! So what can you do as far as repairing bad credit?

Credit reporting agencies are regulated and have to follow the Consumer Reporting Act. They are regulated by the Ministry of Government and Consumer Services. According to the Act, after 7 years of no activity on an account (activity is a payment, using the account, writing off the account, etc.) it should be removed from the credit report. However, sometimes this does not happen.

What are your options? Should you just continue to wait and hope for the best? No. There is no guarantee that the agency even knows about the mistake - they probably do not. This means you have to get your credit report, prove that no activity has taken place, and then start the battle with TransUnion and Equifax.

Great, a battle has to take place? The pen may be mightier than the sword, but that doesn’t necessarily mean these agencies are apt to read whatever you’ve written. Sometimes it takes a bit more pushing and shoving to get the job done. What you need is someone in your corner who can take up arms in your defense, a representative with the knowledge and understanding of both how these agencies function as well as the importance this issue holds for your financial stability.

Bad credit makes it almost impossible to do anything, things like financing a home or car, and if you get the financing interest rates will be sky high! Don’t let the prospect of repairing bad credit scare you - it needs to be done.

DebtCare Canada has a brand new program that places a representative in your corner - someone with the ability to deal with TransUnion and Equifax and have old items removed from your credit report. When it comes to repairing bad credit, call us for help: 1-888-890-0888.

Wednesday, 14 October 2015

In the News: Who is Filing for Bankruptcy? A lot of Seniors it Seems

With Canadian consumer debt on the rise, it is no surprise that filing for bankruptcy has become a popular form of debt relief. The ability to combine all debts and make one monthly payment, as well as the ability to halt collection calls and collection action, has proven to be quite appealing for a vast number of people.

Accordingly, a vast array of individuals from diverse demographics are choosing this option -but which group is most likely to go this route? According to a recent CBC News article, it seems a lot of seniors are filing for bankruptcy as a way to get relief from debts that have piled up.

The article states, “According to a review of 6,000 insolvency filings handled…in 2013 and 2014, the share of debtors aged 50 and over increased to 30 per cent compared with 27 per cent in the previous two-year period,” with credit cards and payday loans representing the debts of highest concern.

The report also found that seniors and those in pre-retirement have accumulated the highest unsecured debt load among all age groups: “On average, debtors 50 and older filing for insolvency had $68,677 in unsecured debt, while those over 60 had total unsecured debt of $69,031.”
You can read more about this here:

Furthermore, according the Globe and Mail, several factors have contributed to this, including the higher number of personal loans being granted to adult children. For seniors with children, a loan to a child has become quite common, and although intentions may be good, often these loans go unpaid, leaving parents in a position of financial strain.

Additionally, seniors are the ones with the highest unpaid tax bills owed to the Canada Revenue Agency. Read more on this here:

This rising senior debt, coupled with the fact that income is generally less in the post-retirement years, has led many seniors to turn to trustees for assistance. And this isn’t a bad idea in theory. Why start retirement owing more that you can afford to pay? The only problem is that, without understanding the process in detail, many turn directly to those trustees, rather than to a representative.

Why is this an issue? Bankruptcy trustees are looking out for the interests of creditors, not just the person filing. However, a personal representative, one with the debtor’s interests in mind, can ensure protection throughout the process, lessening the risk.

If you are worried about debt in your retirement years, a fresh start thanks to filing for bankruptcy may just be the answer. Just make sure that you are protected. Call DebtCare today. We represent you - not your creditors, and can work towards a fair and objective result. 1-888-890-0888.

Wednesday, 7 October 2015

Need to Know: What is a Consumer Proposal?

It is no secret that many Canadians struggle with debt. The ease with which credit is granted, followed by the difficulty in trying to resist the temptation to buy what we perhaps can’t necessarily afford, means that Canadian consumer debt seems to continually grow, even when we are continually cautioned.

With this consumer debt comes the need for debt relief. Debt relief can take many forms, some more well-known than others. This week we are looking at one of the most popular forms, the consumer proposal, and answering a common inquiry: what is a consumer proposal.

Similar to a bankruptcy, a consumer proposal is a legal solution for dealing with debt. That being said, it is not a bankruptcy, and in many cases individuals find consumer proposals to be better when it comes to assets. For example, many people who opt for consumer proposals are able to keep their homes or cars.

So, what is a consumer proposal? When you are in debt, and can’t seem to get any traction as far as paying it off, you may choose to make a proposal to your creditors, based upon an income and asset calculation. This is a consumer proposal. In this proposal, you offer to pay creditors either all or a certain percentage of the debt owed, monthly, over a term of typically 4-5 years. The amount of your proposal is based upon your income/assets and your ability to pay.

Once this proposal is presented to your creditors, they have a finite period of time to vote to accept or reject it. Once accepted, this becomes a legally binding contract between you and your creditors, and you begin making the monthly payments.

Benefits of a consumer proposal:

·         Debt is usually reduced in a proposal but even if it is not the proposal will stop interest from accumulating.
·         A consumer proposal stops collection action being taken by unsecured creditors, such as wage garnishments, frozen bank accounts, etc…
·         A consumer proposal can be paid in full at any time, and will be removed from your credit report 3 years following the date in which it is paid in full.

A consumer proposal is a legal solution, one covered under the Bankruptcy and Insolvency Act, and while it is not a bankruptcy, it is administered by a trustee.

Something to keep in mind: a bankruptcy trustee is an administrator who earns money based on the size of the proposal negotiated. They do not represent you – they are a court appointed officer with a job to ensure that you make a proposal that is a win for your creditors. This can be confusing because many trustees advertise solutions as though they represent you, when in fact they are more subjective than that, and often working for their own best interests.

A proposal is a good solution, but you should not make one through a trustee unrepresented. A representative represents you so you can speak openly without consequence. A representative can negotiate the deal on your behalf with the trustee, and can often negotiate a more competitive deal than had you gone directly to the trustee.

So, what is a consumer proposal? A very viable debt relief option - but one that you should know all about before contacting a trustee. Call DebtCare today - we represent you, not your creditors. 1-888-890-0888.

Wednesday, 23 September 2015

Getting Prepared: Consolidate Your Debt Long Before the Holidays

With the end of September fast approaching, that means the seasons are officially changing. It also means that the holiday season is only 3 short months away. If you are in debt, this can become a stressful time, very quickly. People often rack up considerable debt over the summer months, with family vacations and the like - but once the summer is over, it comes time to face reality once again, and for many that means dealing with that mountain of debt.

Instead of continuing to put it off, why not establish a plan to deal with the debt sooner, rather than later. Use these tips to help get yourself prepared.

     1. Start with a budget. Look at your monthly payments, where you spend your money on a regular basis. An easy way to do this is with a budget template - one that includes all incoming and outgoing costs. Then think about where you can cut back. Perhaps you can eliminate some of the unnecessary expenditures, instead using that money to pay off your debts.

2. Look at the debt you have. How long have you owed the money, who do you owe the money to, and how much interest are you paying versus what is going onto those balances? Are you only making minimum payments and not actually paying down the debt?

3. Once you’ve examined your debt situation, consider your debt repayment options. Restructure debt if necessary – minimum payments don’t pay down debt.

4. Get a professional financial consultation to learn your consolidation options – while focusing on long and short term financial goals. Consolidating all of your debts may be easier than you think - and the various options available may actually save you a lot of money in the long run.

5. Start saving. With the money that will be required for gifts, why not start putting away a little bit every paycheque? You might be surprised at how much this will take from your shoulders come December.

With the holidays coming up fast, make this the year you go into the season debt free. Eliminate the stress that this time of year can bring, and instead use it as a time to enjoy family and friends, without having to worry about what the New Year will cost you.

Rather than racking up holiday debt and crying over those bills in January, why not come up with a financial plan now? Call DebtCare Canada today at 1-888-890-0888.

Wednesday, 16 September 2015

Financial Focus: Wage Garnishments in Ontario

Nothing is worse than getting your wages garnished, and it seems as though this is happening with increased frequency - many Canadian individuals are facing wage garnishments in Ontario as a result of debts in collections, CRA tax debts, or Family Responsibility.

No matter how you slice it, wage garnishments are brutal, and carry with them various personal and professional consequences. For example, not only will this type of collection action cause personal financial hardship, making bill payments incredibly difficult, it can also impact your professional life. Since wage garnishments are sent to employers, once your employer learns of your financial troubles, your reputation will be impacted, and this could have important and costly ramifications. Additionally, if you own your own business, it will be your clients that receive notice to garnish receivables, thereby impacting your reputation.

Facts about wage garnishments in Ontario:

-      If you don’t pay your debts, your creditors can take you to court and obtain a court order to have your wages garnished. However, some creditors, the CRA as the most common one, don’t need a court order and can simply send out a Requirement To Pay notice and the deed is done.

-      Under the Ontario Wages Act, a creditor can garnish up to 50% of your gross wages, depending on the organization owed. The actual amount is determined by the court, but typically garnishments in Ontario are around 20%. That being said, if you are self-employed, and owe money to the CRA, a garnishment can get as high as 100% of your receivables.

-      Wage garnishments can be stopped. Some people assume that once a garnishment is in place, it will remain in place until a debt is paid in full. While this is one way to remove a garnishment, it is not the only one.

o       Negotiating a voluntary arrangement with a creditor is an option, although once a creditor has gone through the trouble of garnishing you they are not going to easily let go and may still demand payment in full.
o       Going to court is another option. Keep in mind that this can get expensive, especially if it is tax court. This is because in small claims court you may represent yourself, whereas in tax court you usually need a lawyer.
o       A third option is working with a debt counsellor on a consumer proposal. For many Canadians, this is the option that makes the most sense, often because it will not only stop a wage garnishment in its tracks, it will also freeze interest, consolidate all unsecured debts into one monthly payment, and will often result in a much smaller balance to be paid off.

Wage garnishments in Ontario can quickly turn a financial issue into a financial nightmare. Once a creditor has leveraged this form of collection action, removal may be difficult, but it is not impossible.  You have options.

For more about having a wage garnishment lifted, please contact DebtCare Canada today by calling 1-888-890-0888.

Wednesday, 9 September 2015

Faceoff - Canadian Bankruptcy Trustees vs. Canadian Debt Counsellors

When you are struggling to make even the minimum monthly payments to bills, or worse, having to choose which bills to pay each month, it is probably time to consider professional financial help to get things back on track. But how can you best determine which route is the right one, and who you should elect to stand in your corner? We can help. Today’s topic: the financial faceoff - Canadian bankruptcy trustees vs. Canadian debt counsellors. Both can help you get out of debt - but not necessarily in the same way.


A Canadian bankruptcy trustee is a court appointed officer, appointed by the Superintendent of Bankruptcy. Their role is to administer bankruptcies and consumer proposals - but to do so on behalf of the interests of all parties. They don’t represent you as the client, they represent both you and your creditors. This means that, since they are not your representative, they can use the confidential financial information you provide to them to get the best deal for your creditors. They are paid out of the estate in the case of bankruptcy, and out of your pocket in the case of a consumer proposal, so their paycheque is then determined by how much is paid by you to your creditors.

Debt Counsellors

Often bankruptcy trustees like to say that you don’t need to pay a debt counsellor, and can just go right to them. This is because if you do this they can control the filing – which is especially enticing in the case of consumer proposals, where, as mentioned above, the more you pay, the more they earn.

Instead, debt counsellors are paid by YOU, they represent YOU and only YOU. They know insolvency inside and out and you can trust that any information you provide to them is not going to be used against you - you can tell them everything without fear of unanticipated consequences. The role of a debt counsellor is to structure your financial information, assist you in finding a good trustee, and to help you manage negotiations with a trustee.

Both bankruptcy and consumer proposals represent important and viable solutions when debt becomes unmanageable. That being said, going right to a trustee and hoping for the most favourable outcome will often leave you disappointed.  Consider speaking with a debt counsellor first and having them negotiate a consumer proposal or bankruptcy on your behalf - NEVER go to a bankruptcy trustee unrepresented.

For more about the difference between a Canadian bankruptcy trustee and a Canadian debt counsellor, please contact DebtCare Canada today at 1-888-890-0888.

Wednesday, 2 September 2015

Back to School Blues? Consolidate Credit Cards and Stop the Interest

The back to school season, particularly for parents, is often a very hectic time of year, especially with regard to finances. The need/desire for new school clothes, shoes and supplies often leaves parents with racked up credit cards once all is said and done - or rather, purchased. And often accompanying these credit card bills is the challenge of finding money to pay them off.

Check out this infographic from BMO to see just what these costs add up to:

So, what options are available? Consolidating credit cards is a great way to reduce your debt - and often makes sense – but the type of consolidation depends on your own personal circumstances. Here are a few options that may be available to help you deal with that back to school debt.

1.    Home equity loan. By using the equity in your home, you can consolidate credit cards, thereby reducing interest and consolidating the various bills into one monthly payment. Of course, this is only possible if you own a home and have sufficient equity for this purpose. If you rent, or are without equity, this is probably not going to be a viable option for you.
2.    Consumer proposal. This is another great option, especially if your credit isn’t great or if you don’t have the security or equity for a loan. A consumer proposal will have some impacts on your credit in the short term, but this is balanced out by the fact that interest stops accumulating, there is, like a loan, just a single monthly payment, and in many cases the overall debt owing is reduced. 
3.     Line of credit or loan from a lender. This is another good option, and can achieve the same things as a home equity loan: lower interest and one monthly payment. You will need to have good credit or security for this option. At the same time, this is often the most expensive option of all because it will involve higher interest than a home equity loan or a consumer proposal.
Kids are expensive, and when back to school season rolls around, they can become even more so. Once those bills start coming in, don’t stress. 

Call DebtCare Canada to find out about how to consolidate credit cards and get rid of debt: 1-888-890-0888.

Wednesday, 26 August 2015

Ontario Bankruptcy Trustees – Who They Are and How They Advertise!

Debt consolidation, get out of debt, debt relief: it is hard to turn on the radio or television these days and not hear one or all of these phrases. Why? Because so many Canadians are facing financial challenges thanks to the ease with which credit is granted coupled with high (credit card) interest. The temptation to pay on credit can quickly lead to getting in over your head, and then struggling to find a solution.

When it comes down to it, the question is, who advertises these solutions and what do they do?
Ontario bankruptcy trustees, more aggressively now than ever before, are advertising to the public that they offer the best solution for people facing financial woes. We disagree with much of the advertising we hear from many Ontario Bankruptcy Trustees. Why? Because we exist because of them!

Ontario bankruptcy trustees promote financial solutions. However, if you choose the solutions offered, the Ontario bankruptcy trustee does not represent you.  A bankruptcy trustee in Canada is a court appointed officer who administers estates when a bankruptcy or consumer proposal is filed. They do not represent you, they do not represent your creditors. They apply rules set out in the Bankruptcy and Insolvency Act. The trustee is required to represent the best interests of all parties (and this includes their own financial interests).

What does this mean? Well, trustees are paid a tariff out of the proceeds of your bankruptcy or consumer proposal. In the case of bankruptcy the fee is fixed, whereas with a consumer proposal the fee grows with the amount of the proposal.

Some things to know:
·         Trustees advertise to you, despite the fact that they don’t represent you - this is because without you, they have no business.
·         In the case of bankruptcy, finding surplus income means that they can extend your bankruptcy and collect larger tariffs because the bankruptcy is being administered for a longer period of time.
·         In the case of consumer proposals, convincing you to propose a higher amount to your creditors will result in the collection of more fees - and thus is a major priority for them.

Now, of course a few bad apples shouldn’t spoil the whole bunch, and we don’t mean to say that all trustees are shady. Many trustees in bankruptcy are reputable and do business above board - but the few that don’t can do a lot of damage. There are just too many conflicts of interest and the law needs to go further in terms of requiring trustees to state in their advertising that while they are promoting a service they don’t represent you.

A consumer proposal or bankruptcy is often a really good financial solution for someone backed into a corner. These allow for one monthly payment, can reduce debt, stop interest, and stop collections. Just keep in mind, just as you wouldn’t go to a meeting at the CRA without your accountant, you shouldn’t go to a trustee without your own independent financial representation.

Financial counsellors who specialize in bankruptcy and proposals can structure the numbers, review your information, make recommendations, and bring a proposal forward to a trustee on your behalf- protecting you throughout the entire process.

DebtCare Canada represents your best interests - yours and yours alone. Call us today BEFORE contacting a trustee:  1-888-890-0888.

Wednesday, 19 August 2015

Missed the Small Business Tax Deadline? Canadian Tax Penalties, Interest and Options!

Running a business is tough! Most small business owners are experts in their individual trades, but not necessarily experts in all aspects of business - or other businesses for that matter. For example, you may know how to unclog a toilet, or even install one, but you wouldn’t necessarily want to take on the task of outfitting the plumbing for an entire house. The same is often true when it comes to taxes; many small business owners are well versed in their own finances, but when it comes to their taxes, GST/HST and payroll deductions, etc., this can represent a whole different level of accounting know-how.

When the small business tax deadline passes, there are always a significant number of individuals who have missed it. Most often, small business owners miss the deadline for 5 reasons:

1.    Unsure of when it was
2.    Procrastinated on hiring someone to come in and prepare the books and returns
3.    Think that money will be owed and are not sure how it will be paid
4.     Missing some type of information, proof of expenses are just one example, and so don’t think that their return can accurately be prepared
5.    Think they will not owe and thus the deadline is more of a guideline…

If you are a sole proprietor or part of a partnership in Canada, the small business tax deadline was in June. We are now officially past that date, and so, if you have not filed, you’ve missed it.

If you missed the deadline, the following are the financial penalties:

o   If it is your first time filing late the penalty is up to 5% of the amount owing plus 1% per month for up to 12 months.
o   If you filed late in any of the preceding 3 tax years the penalty is up to 10% of the amount owing and then 2% per month for up to 20 months.
o   Keep in mind that interest is back-dated to the tax year, and accrues on both the principal and penalties!

If you missed the tax deadline, this is considered tax evasion and you could also be subject to criminal prosecution and further financial penalties. Owing money to CRA is not tax evasion, but failing to file is! One will lead to financial challenges, while the other could land you in court.

Often, late filing and tax avoidance is due to an underlying financial problem and an inability to pay. If you missed the small business tax deadline the best course of action is:

Step 1 – Get your books and returns prepared. If you don’t have receipts or other documentation, tell the accountant and they will tell you what you can and cannot include in the return.

Step 2 – Once the return/returns are prepared you will have a better idea about what you owe and can use the numbers above to estimate penalties. Be realistic about your finances. Consider CRA debt, other debt you have and what assets you want to protect.

Step 3 – Meet with a financial professional before you file to get a game plan in place for dealing with what you will owe to mitigate the blow-back of collection problems.

If you are worried about filing late and considering not filing at all because of a looming tax debt, our advice is to file right away to avoid a tax evasion charge, then deal with the debt with professional financial help. Call DebtCare Canada at 1-888-890-0888.

Wednesday, 12 August 2015

Does a Consumer Proposal in Canada Stay on Your Credit for 7 Years?

Many people choose a consumer proposal in Canada to get finances back on track. These represent a great debt relief option because you can settle your debt, often reduce the total balance to be repaid, freeze interest and consolidate the various monthly bills into one single, monthly payment.

Of course, as with any debt relief solution, there are implications for your credit, and we are often asked what those implications are. Many individuals come to us with a fear that a consumer proposal will ruin their credit for the long term, and leave happy knowing that this isn’t actually the case. Often the pros far outweigh the cons, especially when you consider the fact that your credit is likely already not so stellar - coupled with the fact that a CP can save you thousands of dollars and stop self-serving creditors from continually harassing you.

When it comes to consumer proposals, by far the question asked most often is “how long does it stay on my credit report?” The answer is fairly simple, but the length of time really depends of you. Many think that a CP is just like a bankruptcy - on your credit report for 6 years following the date of discharge - but this is not the case.

In a nutshell, a proposal is on your credit for 3 years from the date it is paid off in full. The faster you pay off the proposal, the faster it is off your credit report.

Here is a handy chart to help show you how to calculate how long a CP will be on your credit:

Paid of immediately
On your credit report for 3 years overall
Paid off one year after filing
On your credit report for 4 years overall
Paid off two years after filing
On your credit report for 5 years overall
Paid off three years after filing
On your credit report for 6 years overall
Paid off four years after filing
On your credit report for 7 years overall
Paid off five years after filing
On your credit report for 8 years overall

A consumer proposal in Canada is not like bankruptcy where you have an ongoing obligation to your trustee pending a discharge. Once creditors agree to a proposal, it is binding and can be paid off at any time. Or, you can choose larger monthly payments to get it paid off faster - the choice is up to you and your own personal situation.
Once you have negotiated a proposal and it has been accepted, start rebuilding your credit quickly with a secured credit card. This will help you establish good credit behaviour and show future lenders that you are committed to getting back on track.
Also, make sure that you stay on top of your credit report. Ensure that the credit reporting agencies are aware that you have filed, and also that it has later been paid off - don’t just assume that they have been made aware. Consider sending letters of discharge through registered mail.
Rather than being a credit rating killer, a consumer proposal is actually a great way to begin the process of getting your credit rating back on track. By consolidating all payments and reducing principal, you can get back on your feet, and don’t have to worry about long term impacts.

For more about filing a consumer proposal in Canada, or to discuss other options for debt relief, call DebtCare Canada today at 1-888-890-0888.

Wednesday, 5 August 2015

Your Rights: Canada Revenue Agency Collections Policy

With this year’s tax deadline long gone, for many individuals, the stress that comes with income tax filing is also long forgotten. However, if you are one of the many Canadians now stuck dealing with a tax debt, the stress may just be in its infancy, growing exponentially as the days pass and interest continues to accumulate. How well do you know the Canada Revenue Agency collections policy?

Of course the Canada Revenue Agency has a right to their money, but that does not mean that you don’t have rights as a taxpayer. The CRA is a very powerful organization, and often that power means intimidation and fear - just know that you do have rights and can fight the CRA if you so choose.

Taxpayer Bill of Rights. This is a set of rights established to protect the taxpayer when it comes to things like language, privacy, harassment, objections, etc. For example, if you feel as though you are being unfairly treated, you are able to file a formal complaint under the Bill of Rights. Intimidation is a tactic that often works, but largely because people are unaware that avenues for recourse exist.

Here is a link to the CRA website and the Rights in their entirety:

Additionally, when it comes to a tax debt, individuals are often not aware of the programs that exist to help fight CRA collection action, actions such as a wage garnishment, frozen bank account, or property lien. These collection actions can cause extreme financial hardship and getting them lifted can be a challenge. Some of these programs can also stop interest and penalties. For example, the Taxpayer Relief Program or even the Voluntary Disclosure Program may give you the chance to deal with what you believe are tax debts leveraged as a result of personal circumstances which prevented you from filing or impacted your ability to pay.

Just remember, any negotiations you enter into directly with the CRA can have negative impacts long term; often in exchange for a repayment plan the CRA will require personal information, information that will later be used against you! The CRA will never voluntarily negotiate to reduce principal, and typically this can only be achieved through a consumer proposal or bankruptcy.

If a CRA tax debt has you feeling anxious and overwhelmed, our advice is NOT to call directly to negotiate, but rather to speak first with a debt counsellor with the experience and knowledge that will help you protect yourself. Call DebtCare Canada today at 1-888-890-0888.

Wednesday, 29 July 2015

Filing a Consumer Proposal in Canada – Does it Make the Most Sense for You?

The frequency with which Canadians are filing consumer proposals in order to get back on solid financial ground has increased significantly in the last few years. The reason is fairly obvious; the ability to stop collection action, halt interest, combine all payments into one, and often to negotiate for a smaller repayment amount, make filing a consumer proposals in Canada a very attractive debt relief option.

However, because a consumer proposal is a solution for dealing with financial problems, some assume that individuals on the lower end of the income scale with limited assets are the most likely candidates for a proposal. It is actually quite the opposite – often consumer proposals in Canada are filed by higher income earners.

Why? A major factor is the fact that, a few years ago, bankruptcy laws in Canada changed.

Higher income earners - Now there is an income and expense calculation (which is very low by the way) that looks at whether you earn more than a basic amount. If you do, 50% of any additional income is surplus income in a bankruptcy, so a higher income earner ends up having massive monthly payments. Also, if you have surplus income, you have to make monthly payments in bankruptcy for 20 months as opposed to 9 months (the limit if you are under the income/expense limit).

Homeowners - Believe it or not, in bankruptcy and in consumer proposals, many people are able to keep their homes! In a bankruptcy though, home equity is considered surplus income and so 50% of that equity has to be repaid. Instead, many homeowners opt for a proposal because it is a negotiated settlement so there is room to negotiate that less equity be repaid.

In a consumer proposal, you offer your creditors a sum that you will repay that covers all unsecured debt. As soon as a consumer proposal is filed, the creditors have a specified amount of time to accept or reject. Creditors who don’t answer are considered as accepting. As long as creditors representing 51% of the debt accept, the proposal goes through.

If accepted, the person has to make a minimum payment equal to the amount of the proposal divided over 48 or 60 months. That said, a consumer proposal can be paid in full at any time which also makes it more attractive to higher income earners, especially those who get large annual bonuses.

An additional reason for the attractiveness of a proposal is the impact it has on your credit rating. If paid off within 1 month to 3 years, a consumer proposal ends up being on your credit less time than a bankruptcy.

If you are struggling with debts and the threat of collection action, call DebtCare Canada today. Filing a consumer proposal may just make the most sense for you! 1-888-890-0888.

Wednesday, 22 July 2015

You Can Stop a Wage Garnishment in Ontario – Here Are Your Options!

Wage garnishments impact thousands of people every day - and can come as a most unpleasant surprise for those individuals.

No matter where you work - whether you are an employee in a large corporation or you own your own business, creditors, through the court, can still place a wage garnishment on your wages or your receivables. If you are an employee, your employer is served with a Notice of Garnishment and must comply. If you are self-employed, your clients are served and must submit any payments directly to the court. 

Beyond the financial implications, a wage garnishment in Ontario can have serious consequences in other areas of your life. For example, if you work for someone else, once that individual receives a Notice of Garnishment regarding the wage garnishment, they will be fully aware of your financial problem and thus may view you in a different light. Responsibility and reliability may be questioned, and any company that required a credit check upon hiring may take this new information into consideration.

If you work for yourself, especially with a small company, your reputation is important, but if your clients are receiving letters telling them to submit payment directly to the court, this could tarnish that reputation. The hassle may cause those clients to look elsewhere in the future.

Once a garnishment is in place, is paying it off the only option? Perhaps not.  A wage garnishment in Ontario can often be stopped but this largely depends on who issued it.

Here are a few of the most common types of wage garnishments in Ontario:

1.     Issued through the court – someone sued you, got a judgement and is enforcing it. Generally this can mean a loss of up to 20% of your earnings, and can only be stopped by paying the debt or making an arrangement with a creditor, by court motion, or by arranging a bankruptcy or consumer proposal with a debt counsellor.

2.     Issued by the CRA - the CRA does not need a court order, and can garnish up to 50% of your wages. If you are self-employed or on a pension this could be up to 100%. A CRA wage garnishment can only be stopped by: CRA’s consent or an arrangement, by arranging a bankruptcy or consumer proposal with a debt counsellor, or by taking CRA to tax court (the most expensive route). A CRA wage garnishment is particularly nasty….

3.     Issued by Family Responsibility – the only way to deal with one of these is to pay it in full or go back to court - there is no other option.

4.     Issued because of EI overpayment or by government after receiving money under false pretense – this can be complicated and these are instances where it is difficult to get protection. Like the CRA, this does not require a court order and if fraud is involved it can get tricky.

When you are facing a garnishment of your wages, no matter the source, your best bet is to speak with a debt counsellor. The solution to your financial problem will largely depend on your personal circumstances, but ignoring the garnishment should never be an option.

Avoid the embarrassment and financial hardship of a wage garnishment in Ontario by calling DebtCare Canada today at 1-888-890-0888.

Wednesday, 15 July 2015

Rebuilding Credit: Bad Credit Rating Doesn’t Always Just Disappear After a Few Years

It is a very common misconception that bad credit just “disappears” once debts are paid and your credit behaviour improves. However, past credit activity doesn’t just evaporate into thin air with a few months (even a few years) of good behaviour. Rebuilding credit takes some work.

For example, if you file for bankruptcy in January of year one, pay on time, every month, and are discharged in January of year 3, that bankruptcy will remain on your report for 6 years following the date of discharge (January of year 9) - not from the time that you declared.

When it comes to consumer proposals, these stay on for 3 years following payment in full, as does any credit counselling.

Periods of inactivity can also impact your credit rating. For example, if a lender assigns debt to collections, this results in activity, and negative activity at that. However, if you don’t have any activity, this is not necessarily a good thing either.

When it comes to activity, a tip is to continually use credit and to repay that credit on time, all the time. A secured credit card is a good way to do this without being tempted to start relying on credit again or getting back in over your head.

So, if you have bad credit and want to clean it up, here are a few steps you can take to get the process started:

·         Step 1 – Get your credit report and see what it says. These are available online from both Equifax and TransUnion. Some lenders use one, whereas some look at both.

·         Step 2 – Deal with the bad credit debt on your credit report by paying it off. Better yet, settle it for far less than you owe with a consumer proposal to stop interest and reduce overall amounts.

·         Step 3 – Document EVERYTHING. Any time you settle a debt, get a letter re: settlements and arrangements and copies of proof of your action. It can take some time for these payments to register, but keep on top of it.

·         Step 4 – Make sure the credit reporting agency knows these debts have been paid - don’t count on your lender to tell them. Send the above noted documents via registered mail to ensure they reach their intended destination.

·         Step 5 – Begin the process of rebuilding. Consider a secured credit card to show you are committed to maintaining positive history.

When it comes right down to it, the only way to improve a poor credit rating is to pay your debts and allow time to pass to show that your payment habits have improved.

For more information about how to rebuild your credit effectively, call DebtCare Canada today at 1-888-890-0888.