BOO! Don’t Let Your Consumer Debt Scare You – Fix It!

This time of year it is hard not to find yourself celebrating the scary season, whatever that may involve. However, the scare factor should have everything to do with ghouls and goblins – but nothing to do with your consumer debt. If your debt scares you – no matter what time of year it is – it might be time to consider taking control of your finances and getting out of debt.  

What is consumer debt – is it just debt? Well, no. Consumer debt refers to the debt accumulated through purchases which are consumable or do not appreciate in value. Credit products such as credit cards are the main conduit for this type of debt. Debt from other transactions, such as your mortgage, is not considered consumer debt.

Consumer debt is often the most troublesome form of debt, especially when it is debt owed on a credit card. This is because of the high interest rates charged by credit card companies. This interest, often around 20%, can make paying off debt very difficult, especially when you can only afford to make minimum payments. Don’t think it is a major issue? Most credit card statements will give you an approximate timeframe as far as when the debt will be totally paid off by paying only the minimum payments. Take a look at that number – it just might scare you into action.

If you are finding it difficult to decrease your balances, or if you continue to rack them up and then have trouble meeting the minimum payment requirements, a smart idea is to get some help – you don’t have to do it alone. Visiting a debt reduction company with experience helping people deal with debt can help you get things back on track. Your debt reduction solution may involve debt consolidation, credit counselling, a consumer proposal or bankruptcy – it all depends on your individual financial situation. Sitting down with a professional will help you to establish a plan to get things going. This will help to stop or avoid harassing calls from collection agencies and any future (or current) enforcement action, such as wage garnishments or property liens.

Stop ignoring problem consumer debt – and don’t let the thought of dealing with it frighten you. Get the help you need today to get back on the road to financial success.

For more information about dealing with your consumer debt please contact DebtCare Canada today by calling 1-888-890-0888 or visit www.debtcare.ca. 

School For Debt Relief #3: Rebuilding Credit

The beginning of the school year is behind us; students have settled in and teachers have found their groove. This final blog in our school for debt relief series will help get you back on track for the rest of the school year. Once you have worked out your debt repayment plan, stopped the collection calls and gotten your finances righted, it is time to think about rebuilding credit. 

If your debt became problematic in the past, it is highly probable that your credit has taken a hit. Thanks in part to things like missed or late payments, having too much credit or a bankruptcy or consumer proposal, your credit is now very likely at the low end of the scale and you may be finding it very difficult to secure any sort of financial funding. If this is where you currently find yourself it is important to understand that rebuilding your credit takes time, but it is possible. 

Here is our list of the top ways to help rebuild credit.

Apply for a secured credit card. With a secured credit card, you make a deposit on the card which the creditor then holds as a guarantee. This deposit, usually equal to your credit limit, lets you make regular purchases with the card without the lender worrying about security. Having a secured credit card shows up on your credit report, letting other creditors know that you are being responsible with your credit and not spending outside your means.

Make at least the minimum payment. This is crucial, as it may be what brought your credit down in the past. It is always a smart practice with a credit card to try and pay off the entire balance each month – that way you don’t accrue any interest and can’t get in over your head. That being said, if you cannot make the payment in full make sure that you pay at least the minimum, or just a little more if possible. Any missed or late payments will just get that score decreasing again.

Don’t apply for too many credit products. Applying left, right and centre for credit is going to make you look like you are a credit seeker – and this implies that you cannot meet your monthly needs. Also, do not have too many credit products. Just because you have cards with high limits without using them doesn’t mean that your credit will be good. Keep limits low.

Review your statements regularly and check your credit report annually. To avoid mistakes and to ensure your payments are always made on time, review your statements monthly and report any errors immediately. This is also a good rule of thumb with your credit report – it should be checked for errors and those errors reported on at least a yearly basis (but not too often either).

Just because you have had trouble with credit in the past doesn’t meant that it has to haunt you for the rest of your life. Use these tips to help rebuild credit. And remember, Rome wasn’t built in a day; rebuilding credit takes time – just be responsible and think before you spend.

For more information about rebuilding credit or for debt relief please contact DebtCare Canada by calling 1-888-890-0888 or visit www.debtcare.ca. 

School for Debt Relief #2: Bankruptcy vs. Consumer Proposal

This week we are back in the classroom with the second blog in our school for debt relief series, this time to talk about the difference between a bankruptcy and a consumer proposal. These are two very popular forms of debt relief, but before you jump in it is best to fully understand each option. If you feel as though you are drowning in debt and don’t foresee a solution in the future, one of these options may be just what you need. 

 

In Canada, hundreds of people each year choose to deal with their debt through a bankruptcy or consumer proposal. That being said, the two are very different, so we’ve broken things down to help you better understand how these forms of debt relief can help.

Bankruptcy:

Bankruptcy is the legal process that discharges you from most of your debts. This may involve the distribution or selling of some of your assets to pay creditors, but this depends on your own individual situation. The first time you file for bankruptcy, if you do not have any surplus income, you can qualify to be discharged (meaning you have fulfilled your obligations) within 9 months. If there is surplus income, you can be discharged in 21 months. When you file you are required to report to your trustee on a monthly basis, make monthly payments and complete two credit counselling sessions. If, over the course of your bankruptcy, your financial situation changes to the point that surplus income exists, you will be required to pay additional monthly payments until your trustee is satisfied. Once you become discharged, your debts are gone and your obligations are over.

Things you need to know: once you file you can only be discharged by your trustee – it is up to their discretion to decide when obligations have been met. Additionally, attempting to obtain credit after you have filed (and after being discharged) can be significantly impacted. This is because you are now deemed high risk by creditors.

Consumer Proposal:

A consumer proposal is also a legal process which discharges you from your debts, but in a different way. In a consumer proposal, your creditors agree upon a repayment amount, usually significantly less than what you owe, and then you make monthly payments for a set number of months. This pays off only unsecured credit (credit cards, lines of credit, personal loans), but not secured debt (mortgage, car loans).  Once you have fulfilled your obligations (monthly payments), you are debt free and out of the consumer proposal. That being said, like a bankruptcy, a consumer proposal can impact your ability to secure credit in the future.

Both of these options are valuable if you find yourself struggling with debt. Each option has its pros and cons, and so speaking with a professional debt consultant is the best place to start.

For more information about debt relief and bankruptcy versus a consumer proposal please contact DebtCare Canada at 1-888-890-0888 or visit www.debtcare.ca. 

School for Debt Relief #1: Harassing Collection Calls? Know Your Rights

With September behind us, and the school year in full swing, it is the perfect opportunity to take some time for yourself. So, what better time to give yourself a new start than right now? If you are in debt, this school for debt relief blog is for you. This first blog in the series will look at collection calls and help you better understand how to stop them. 

When you are receiving harassing phone calls from a collection agency it can be very stressful. Each time you pick up the phone can bring with it the anxiety that comes from knowing that you still have not managed to make that payment. But what can you do? If the money is not readily available, not answering or avoiding the calls is probably the best course of action, right? Wrong! This will likely only make the problem worse. 

Here are some things you need to know about your rights when it comes to collection calls. Firstly, when an organization calls you concerning a debt, they are likely calling from a collection agency – an organization hired by your creditors to collect a debt. These calls can sometimes get quite aggressive, so it is crucial to know your rights and better understand what is fair and what is not.

In Ontario there are laws which outline the appropriate behaviour that collection agencies must adhere to when making collection calls. First off, you must receive a notice in writing regarding the debt.

When can they contact you? Here are some of the restrictions put in place by law:

A collection agency cannot:

-        Contact you more than 3 times in the course of 7 days without your consent

-        Contact you on Sunday, except between 1 and 5pm

-        Contact you on any day between 9pm and 7am

-        Contact you on a statutory holiday

-        Use threatening, profane, intimidating or coercive language

-        Use excessive, undue or unreasonable pressure

-        Contact a spouse, family member, friend, etc. regarding the debt unless that person has guaranteed the debt or you have given permission for that person to be contacted.

If you feel as though your rights have been violated you do have some recourse for action. Sending a letter to the agency stating why you feel they have acted inappropriately, or, if the behaviour persists, filing a complaint with the Ministry of Consumer Services are two options to consider.

In the end, the only real way to stop collection calls is to pay your debt. If this is something that you feel you may not be able to achieve on your own it might be time to seek out some professional help. A debt solutions company can present you with the various options and help you get debt relief and stop those calls.

For more information about debt relief or to put a stop to the collection calls please contact DebtCare today by calling 1-888-890-0888.