How to Stop a Small Claims Court Action in Canada

Bad things happen to good people, and nobody intends to run into financial problems that can lead to defaulting on obligations to credit card companies. Individuals lose jobs, income, have medical problems in the family, or separate from spouses. These are just a few of the reasons why an individual might see his or her credit and finances turn into a mess that can seem impossible to clean up. 

Unfortunately, the big banks and most creditors will not be considerate of your personal situation. Your account simply represents a numbered debt to them, and so if you don’t pay them you can quickly find yourself in Small ClaimsCourt.

Most Small Claims Court actions in Canada follow the same process:

1.       Your creditor sues you by filing a claim in the Small Claims Court (depending on the amount that you owe).

2.       Your creditor serves the claim upon you.

3.       You have an opportunity to file a defence.

a.       At this point many people do not file a defence because they are ashamed and know that they owe the money and don’t want to face the embarrassment of going to court. In the absence of another plan to deal with the debt, that is the reason that you are being sued – so not filing a defense is a big mistake.

4.       If no defence is filed, your creditor can obtain a default judgement from the Small Claims Court.

5.       Once your creditor obtains a default judgement, he or she can utilize enforcement remedies that are available through the Small Claims Court, such as garnishing your wages or freezing your bank account.

So how can you stop a Small Claims Court action in Canada? If you know that you owe the money and you know that there is no way to pay the debt off, then you have two choices:

1.       File a defence with the Small Claims Court requesting a monthly payment plan.

2.       If you already have a judgement against you, you can file a motion with the Small Claims Court explaining why you didn’t file a defence and request permission to file one and then request a monthly payment plan.

Here are the challenges with the above 2 scenarios: 1) Your creditor will still have to accept your monthly payment plan; 2) Interest will continue to compound on the debt; 3) The moment you default, you creditor can obtain a judgement against you; 4) The Small Claims Court will continue to be in your life until such time as the debt is paid in full.

Fortunately for you there are programs available in Canada that are legislated options for getting out of debt, and these options may not involve bankruptcy. Leveraging one of these financial programs can stop a Small Claims Court action, even if your wages are being garnished or your bank account is frozen! These programs can reduce your overall debt and freeze interest. If you owe money that you can’t repay, don’t deny or ignore the fact that you owe the money, especially if you have been sued in Small Claims Court. The best way to stop a Small Claims Court action that has arisen from an unpaid debt and resolve your financial problem is to seek professional financial guidance.

For more information about how to stop a Small Claims Court action that is associated with an unpaid debt, contact DebtCare at 416-907-2582 or visit www.debtcare.ca.

Finding Debt Relief from Holiday Credit Card Bills

Credit cards are scary because they are easy to run up and then difficult to pay down. Did you know that last year it was reported that the average Canadian is carrying over $40,000 in unsecured debt? If you are one of these Canadians then you probably had credit card debt before you even started holiday shopping! Now the holiday shopping credit card bills are rolling in and you are likely thinking that you could really use some debt relief. 

Credit card debt presents the following challenges: 

1.       Damage to your credit. Even if you are making your minimum payments credit cards can still damage your credit. Did you know that if you let your credit card balance get close to the limit, or if you go over the limit, it reduces your credit score? Yes, it is true, and not only does it reduce your credit score it also causes a message to appear on the credit report that indicates that the proportion of the credit card balances are too close to the credit limits.

2.       Minimum monthly payments are too small. Credit card companies set your minimum monthly payment at 1-3% of your balance. This is simply too small. If you make only minimum monthly payments on credit cards it can take many years to pay down the balance.

3.       Monthly compound interest. Unlike loans, credit card interest compounds monthly (12 times per year). This means that interest is added to your balance each month. When you combine the fact that your interest compounds monthly with the fact that your minimum monthly payment on your credit card is likely set at 1-3% of your balance, the effective cost to borrow using your credit card is significantly higher than the interest rate on your credit card. 

Credit card debt can quickly become overwhelming because once it accumulates it can become really difficult to pay off. Most people do not have the kind of cash flow needed to really get those credit card bills paid off.  

Getting debt relief from your holiday credit card bills can be achieved three ways:

1.       By paying off the debt by liquidating your savings, getting help from family or winning the lottery. Unfortunately this is an option that most folks don’t enjoy.

2.       By consolidating debt through:

a.       A loan with the bank – you will need good credit for this option.

b.      A mortgage refinance – you will need a home with equity for this option.

3.       By taking advantage of an alternate financial program. 

If you don’t have good credit or assets then an alternate financial program may be the best choice for you.  An alternate financial program will enable you to make a single monthly payment, as in a debt consolidation, and will stop the interest from accruing on your credit cards. Sounds like a great solution right? Well, really the right solution will depend on your personal financial circumstances. Before making any of the above choices your best bet is to speak with a financial consultant who is hired by you, one who can offer you unbiased financial advice so that you can get debt relief from your holiday credit card bills and start off the year on fresh financial footing.

For more information about finding debt relief contact DebtCare at 416-907-2582 or visit www.debtcare.ca.

Getting Out of Debt in the New Year

So the holidays are over and no doubt the holiday bills have started rolling in. It is easy to do serious financial damage during the holidays. Debt can take a mere couple of weeks to rack up, but can take months and even years to pay off. Getting out of debt in the New Year is on many families’ ‘to-do’ lists, but getting out of debt is easier said than done. 

Your ability to get out of debt in the New Year will greatly depend on your own personal circumstances. Let’s review some of your options.

Getting out of debt the good old fashioned way. Getting out of debt the good old fashioned way will take resources because it will involve using your existing assets and cash flow to get out of debt. If you don’t have savings or investments that you can liquidate to pay down debt you will have to take a good hard look at your budget. Think of the time frame in which you would like to be debt free. If it is 24 months for example, then take your total debt, divide it by 24 months and then increase the monthly amount by 30% (to account for interest).  Do you have enough room in your budget to pay off the debt on a monthly basis?

Getting out of debt through a debt consolidation. Getting out of debt through a debt consolidation is an option for homeowners who have home equity or for those with very good credit. Though traditional debt consolidation can be a good choice for getting out of debt – the debt consolidation interest rate, fees and terms will determine whether it is the best choice for getting out of debt.

Getting out of debt through a financial program. If you don’t have assets or savings to pay off your debt and you don’t have room in your budget to get out of debt in a reasonable period of time, then an alternate financial program may be the best solution for you. Some financial programs involve freezing the interest on your debt and even reducing your debt. This can result in greatly reduced monthly payments, making the prospect of getting out of debt a reality for an individual who doesn’t have much to put towards getting out of debt.

It’s a jungle out there and with so many companies promoting different things it can be hard to know what the best financial choice is. Making the wrong financial choices can cause you to pay more in the long run and can even harm your credit. So how do you know a financial friend from a financial foe? By trusting your instincts and doing lots of research. Do they have a website? Do they have a bricks and mortar location? Do they have people following them on social media? Have you heard of them before? If you are dealing with a debt company or mortgage brokerage, is the company’s management accessible to you?

Doing your due diligence and then partnering with a financial service provider who can help you come up with a meaningful solution to deal with your debt will be your first step towards getting out of debt and enjoying financial freedom in 2013.

For more information about getting out of debt in 2013 or if you need help with your 2013 financial planning please contact DebtCare at 416-907-2582 or visit www.debtcare.ca.

Top 5 Tips for Financial Fitness in 2013

The holidays are behind us and 2013 has officially arrived. The holidays were a time for family and cheer; the New Year is an opportunity for new beginnings. If your New Year’s resolution involves getting financially fit, then this is the article for you! 

Here Are DebtCare’s “Top 5 Tips for Financial Fitness in 2013”:

Financial Fitness Tip #1 – Determine what you really spend. For one week, closely monitor your spending. No expense is too small to track this week. If you buy a coffee, track it! You can do so using ‘notepad’ on your smart phone or by keeping a small notebook with you.

Financial Fitness Tip #2 – A good budget will be the roadmap to your success. Put together a strong budget that includes both your fixed costs, like rent/mortgage, utilities, car payments, etc., along with a realistic estimate of everyday soft costs. Try to find places in your budget where you can save.

Financial Fitness Tip #3 – A family that plays together stays together. If you are planning on tightening your belt in the New Year in an effort to reach your financial goals and you have a spouse and/or children, you are going to have to make them aware of your plans. As a family you can work together to find savings in your household and curb unnecessary spending.

Financial Fitness Tip #4 – Review your debt. Look at your unsecured debts, interest rates and minimum monthly payments. Do you have room in your budget to double or triple up on your minimum monthly payments? You will need to. Since the minimum monthly payments on credit cards are generally set so low and the interest on credit cards is generally high, you will find it nearly impossible to pay off your credit cards in a reasonable amount of time by making only minimum payments. If you want to work towards financial fitness you will need to create room in your budget to pay down your credit cards.

Financial Fitness Tip #5 – Request your credit report from Equifax. Even if you think your credit is going to be bad, it is still a good idea to request your credit report. It is important to know where you stand so that you can consider the state of your credit in your financial decisions. On the flip side, you may think your credit is great but learn that there are issues that you were not aware of that are impacting your credit score.

Once you have a plan to deal with your debt, a budget, and an understanding of your credit, you must follow through with your plan to deal with your debt: you must follow your budget and you must work towards improving your credit. Achieving financial fitness takes time and commitment!

When you achieve financial fitness you will find that you have more cash flow, can begin to amass savings and investments, qualify for lower rates on credit products, and more.

The New Year is a better time than ever to commit to becoming financially fit!

For more information about getting financially fit for 2013 or if you need help with your 2013 financial planning please contact DebtCare at 416-907-2582 or visit www.debtcare.ca.