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: http://www.cbc.ca/news/business/seniors-in-ontario-make-up-30-of-bankruptcies-report-1.3060463.

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:  http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/growing-number-of-seniors-account-for-ontarios-insolvency-filings-study/article24236617/.

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.