Getting Out of Debt Blog Series #1: Consumer Proposal

With summer winding down and consumer debt levels remaining at all-time highs, we thought it was a good time for a back-to-basics ‘getting out of debt blog’ to help you ease into fall with less worries on your plate. This first blog in the series will talk about the consumer proposal, giving you the ins and outs to help you better understand your options for getting out of debt. Other blogs in this series will focus on debt consolidations, debt settlement and bankruptcy. 

What is a consumer proposal? In a nutshell, a consumer proposal is a proposal that is administered by a trustee where you offer your creditor(s) a sum of money to be repaid over a term of 5 years. This sum could be less than the total debt you owe. Also, a consumer proposal will stop legal action being taken against you by unsecured creditors who are included in the proposal, stop collection agency harassment and freeze the interest accumulating on your debt.    

A consumer proposal has to be conducted by a licensed trustee in bankruptcy – you cannot negotiate one on your own. A financial consultant can consult with you on your financial options and if a consumer proposal is the solution you elect, he or she can co-ordinate a fair deal for you with a trustee. 

Unlike bankruptcy, once a consumer proposal is in place you have no ongoing obligation to the trustee whatsoever – you simply have to make your monthly payment. Consumer proposals can be repaid in full at any time. This is a major plus for folks who want to rebuild their credit quickly. A consumer proposal will be completely removed from your credit report 3 years from the date it has been paid in full. Beginning with a secured credit card or RRSP loan, those who make consumer proposals have many options available to them for rebuilding credit.

With anything there are caveats. A consumer proposal must be accepted by your majority creditor. Because trustees represent you and your creditors it is important to understand how consumer proposals work and to have your own representation through the process. Negotiating a proposal that is accepted by your creditor(s) and that is the best deal for you is key. Having representation ensures that you have someone who has expertise in this area to ensure that you do get the best deal and that all aspects of your financial situation have been considered.

Filing a consumer proposal is, for many people, a smart solution for getting out of debt. That being said, it needs to be approached correctly, and you will need the help of a professional to carry it out.

For more information about consumer proposals or other ways of getting out of debt, please contact DebtCare Canada by calling 1-800-890-0888.

Collection Agency Harassment: How to Stop the Calls

Canadians have become so accustomed to carrying debt, and for some being in debt has become the norm. It is true that the vast majority of Canadians do have debt and when debt accumulates to the point where you are defaulting on monthly payments, the debt you have can be the source of considerable stress. This is especially true if your creditor has sent your debt to a collection company resulting in collection agency harassment!

Collection agency harassment comes in many forms, but the most common is phone calls demanding payment for uncollected funds. These calls can come during the day, in the evening, on the weekends – when you are at home and at work. If you have been receiving these calls, or are nervous that they may begin in the very near future, it is best not to avoid the issue. The calls are not going to stop just because you don’t answer the phone – if anything they will increase in frequency. The collection agency may also pursue other methods to make contact with you that can be the source of embarrassment.

In provinces like Ontario collection agencies are regulated by the appropriate ministry. In Ontario that ministry is the Ministry of Consumer Services (MCS). Reading your province’s legislation that deals with the regulation of collection agencies is your first step towards stopping collection agency harassment. If an agent called you at a time he or she wasn’t supposed to or disclosed information about you or your debt to a third party such as a family member or co-worker, you may file a complaint with the government to stop the collection agency harassment.

Formulate a plan to deal with the debt. It won’t go away by itself and as long as it sits in collections it will accumulate very high interest, can be damaging to your credit and the collection agency will continue to pursue you. Speak with a financial consultant who has experience stopping collection agency harassment for help and also to learn about programs that can help you deal with the root problem - the debt itself.

There are several very effective forms of debt relief in Canada, most common among them are debt settlements, consumer proposals, debt consolidation, mortgage refinancing and bankruptcy. All of these approaches have different benefits. While a consumer proposal can reduce your debt and freeze interest, it can also impact your credit in the short-run. While mortgage refinancing will enable you to rebuild credit faster, you will have to pay closing costs and interest to use your home equity to consolidate your debt. Only a skilled financial consultant can help you to review your options and help you choose the one that will best help you achieve your personal financial goals.

If you are facing collection agency harassment it might be time to get the ball rolling and seek out debt relief from a professional organization experienced in dealing with collection agencies and helping individuals get rid of their debt. Get control of your debt - don’t let your debt control you!

For more information about debt relief to stop collection agency harassment please contact DebtCare Canada today by calling 1-800-890-0888.

Collection Agency Harassment is Common and You Can Stop It

The number one tactic that collection agencies employ to entice you to negotiate with them is by simply harassing you, every which way.

In extreme cases we have had clients tell us about collection agencies who have used the following aggressive collection tactics to force a dialog:

- Sending an abundance of mail with collection agency letterhead to the residence

- Sending mail to the consumer at work

- Calling the consumer at work and/or leaving messages with co-workers

- Contacting the consumers payroll department

- Leaving descriptive messages on the consumers voice mail

- Calling the consumer multiple times daily, even at night and on Sundays

Especially in Ontario, there are a number of protections in place that protect consumers from “over the top” collection agency tactics. The Ministry of Consumer Services regulates collection agencies and the Ministry of Consumer Services licenses all collectors in the Province of Ontario.

When a consumer has a problem with a collection agency they can file a complaint against the collector personally or against the collection agency. If the Ministry agrees that you have a valid complaint they will write to the collection agency requesting a response. Depending on the response, the Ministry will continue to pursue the complaint until a satisfactory solution is reached.

Here is one example of an existing rule that applies to “third party disclosure”. A collection agency cannot provide information about you or your dealings with them to any third party. If a collection agency phoned you at home and your brother answered the phone and the collection agency told him to “have you call them back about your credit card debt”, this would be a third party disclosure violation.

An answering machine is also considered a third party. In many households many people have access to a single answering machine. Collection agencies are not permitted to leave details about your dealings with them on an answering machine. A co-worker is yet another example of a third-party.

If the fact of the matter is that you simply cannot pay your debt, there are steps you can take to ensure that the collection agency treats you fairly. With that said, the fastest way to get a collection agency off your back is by dealing with the debt. You can do this a number of ways: through a debt consolidation, through credit counselling or through government programs.

Coming up with a strategy to deal with your debt will put you on course to get the collection agencies out of your life and start working towards better financial help. For more information about collection agency harassment and what you can do to deal with debt that is in collections, visit http://www.debtcare.ca/