Getting Out of Debt – Halloween Horror Stories to Learn From

No matter how you slice it, debt is a scary thing, especially when those phone calls start coming in from creditors threatening to take action in order to obtain what they are owed. In the spirit of the season, we thought we’d share some truly terrifying getting out of debt horror stories in the hopes that you can learn from other people’s mistakes and keep yourself protected!!

Scenario #1: One of the most tragic stories, and yet one we continue to hear on a regular basis, is the one about the “debt consultant” who requires payment in full before paying off your creditors, only to disappear (or the company claims bankruptcy) just as your payments to him are completed! This is such a terrible occurrence that often leaves individuals with little avenue for financial recourse, having paid out hundreds, if not thousands, of dollars in the belief that their debt will eventually be settled.

Lesson to be learned: Don’t trust an individual who asks for payment in full before paying off your creditors – this is just bad news all around!

Scenario #2: We’ve all received them in the mail – those offers from credit card companies that give you 6 months no interest and encourage you to pay off existing credit card debt with this new card. Sure, this may sound like a great option – but what happens when that 6 months is up? Not only have you impacted your credit report with the initial inquiry and subsequent credit seeking, you’ve also essentially traded one card limit for another.

Lesson to be learned: Unless you are certain that you can pay off the initial debt in its entirety before the time limit expires, toss these as you would any other credit card offer.

Scenario #3: Recently a couple entered our office with a story that is financially terrifying for a number of reasons. After attempting to deal with their debt on their own with little success, our clients called the number of a debt company they found posted on a billboard (bad idea #1). The initial phone meeting sounded promising, and the company sounded quite legitimate, so the couple decided that the guarantees sounded so great that the offer was one they could not pass up – until they were asked for a money transfer of $500 to secure the company’s services. Fortunately, after further inquiries, and more online research, the couple realized that this was a major scam and averted a crisis that likely would have resulted in a serious loss of money! What scares us here is the knowledge that far too often the temptation is too much and the due diligence just isn’t done!

Lesson to be learned: Do your research, read reviews, know who it is that you are placing your trust (and your money) in.

True debt relief from a professional, respected, well-known organization is the safest, most effective means of getting out of debt without incurring exorbitant fees and further financial stress. At DebtCare, we are committed to providing you with the knowledge and expertise to help you get out of debt as quickly as possible. Call us today 1-888-890-0888.

Ontario Consumer Proposal – The Ins and Outs

With Canadian consumer debt levels continuing to climb, year after year, it is no surprise that many Canadians are turning to alternative repayment methods in an effort to get out of debt. However, some organizations have taken advantage of individuals without a full understanding of debt, and offer solutions that are less than acceptable.

 

We strive to help individuals with debt problems with honest and realistic options that can eliminate financial stress. In this blog, we attempt to answer some of the most common questions regarding one of these very popular methods - consumer proposals - and provide you with some important information to help you make an informed decision.

Firstly, what is a consumer proposal exactly? A consumer proposal is a legally binding arrangement negotiated between you and your creditors (though an administrator – a licenced bankruptcy trustee) which arranges for a partial repayment of your total unsecured debt. Essentially you promise to repay a portion of your debt, and your creditors will forgive the remaining amount.

What does this mean? After meeting with a consumer proposal administrator and filling out the required forms, a proposal will be presented to all of your creditors (you can’t pick and choose here), who then have to respond and accept the agreement. If more than 50% reject it, you have to amend or adjust and refile. Once the proposal is accepted, you are required to pay a monthly payment to your administrator, who then pays your creditors.

There are a number of substantial benefits of filing a consumer proposal:

1.      Most wage garnishments will immediately stop.

2.      Interest stops accumulating on your current debt from the date you file.

3.      Collection agencies and creditors can’t contact you for payment – it is against the law!

4.      Your home or other assets are protected – creditors can’t touch them.

5.      You are only required to pay back a portion of your debt.

The downside: a consumer proposal does not include secured debts, such as a mortgage – only unsecured debts are covered. Furthermore, once you have filed a consumer proposal, your credit rating is going to be impacted. That being said, if you are in the position that makes a consumer proposal a valuable debt relief option, your credit has likely already been compromised. Consumer proposals typically mean an R rating on your credit report – but in many cases the benefits far outweigh the negatives.

If you are in over your head and are looking for a debt relief option, a consumer proposal can be a very advantageous strategy. They are complex though, and can’t be conducted by anyone but a licenced bankruptcy trustee, and so seeking some assistance is essential. Bear in mind however that it may not be advisable to go directly to a trustee since he by law acts for the creditors as well as the debtor, and his fee is a percentage of the debt being repaid. Accordingly, there is an incentive for the trustee to maximize the amount being paid to the creditors in the proposal. An independent advisor, such as DebtCare Canada, acting in your interests only, can help you to structure your proposal before approaching a trustee.

Want some more information about the ins and outs of a consumer proposal, or any other realistic debt relief method? Call DebtCare Canada today – we can help you out: 1-888-890-0888.

Making Your House Work For You: Mortgage Refinancing to Get Out of Debt

Debt: that one little word that elicits a number of intense feelings, usually all of which are negative. Debt is a fact of life, and unless you have been incredibly financially savvy and have managed to curb any spending that is outside your monthly intake, you are likely in some sort of debt. This may be manageable (automotive financing or a mortgage) or it could be overwhelming (numerous credit cards, personal loans, etc.). If you are in the latter position, ignoring a debt is the quickest way to get into further financial trouble.

Wait. Stop letting that debt rule your life – it doesn’t have to, and letting it continue to do so will likely only make matters worse. You have some incredibly effective options available to you - one of which might be mortgage refinancing.

Mortgage refinancing: simply put, mortgage refinancing involves swapping out an old mortgage for a new one (hopefully better), and then paying off the old loan with the new one. It is different from a second mortgage because, as mentioned, you are essentially paying off the first mortgage in full.

If you are considering mortgage refinancing as a means to get out of debt, here are some important things to remember:

1.      You have to own a home to do this (obviously). Since you are increasing the lending limit on your current mortgage, a mortgage needs to exist in order to apply. You cannot obtain a new mortgage strictly to consolidate debt – to do this you need a personal loan or line of credit. 

2.      Your credit needs to be in good standing. If you are maxed out or have several missed payments, and as a result your credit score is low and your report reflects this, your lending institution isn’t necessarily going to have much faith in your ability to repay your debt. 

3.      Canadian Mortgage and Housing Corporation guidelines have set the total refinancing limit for mortgages at 80% of a home’s value, so if, once your mortgage is refinanced, you would owe more than 80% of that value, a total consolidation of your debts will not be possible. 

Considered these caveats and still think mortgage refinancing might be an intelligent route? That is great – now what? Your best choice is to visit a debt solutions specialist to discuss the process, one who can assist you in applying and eventually getting your finances back on track.

If mortgage financing isn’t an option for you, that same debt specialist can sit down with you and discuss the other options available – you don’t have to do this alone. 

For more about mortgage refinancing or to learn about the various debt relief solutions out there, please contact DebtCare Canada today by calling 1-888-890-0888.

In The News: Canadian Consumer Debt

No matter your situation, debt is likely something that you tackle on a regular basis. This may mean paying bills on time or, if the situation is a little more precarious, deciding which bills you are able to pay on time and which ones can wait. But debt, for the majority of Canadians, is a fact of life: Canadian consumer debt is often unavoidable. 

Check out this recent article from the Globe and Mail regarding the status of Canadian consumer debt levels: -  http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/canadians-taking-on-more-debt-but-delinquency-rate-drops-report-finds/article20343607/.  

According to the article, “As of the second quarter of 2014, Canadian consumers owe $1.44-trillion, up from $1.42-trillion in the first quarter and $1.35-trillion a year ago, according to credit monitoring firm Equifax Canada.” However, although Canadians are taking on more debt, they seem to be better at paying it back: “The delinquency rate, which tracks bills overdue by 90 days or more, fell by 2.8 per cent.” 

For those in the position to make regular payments, on time, debt may not produce the same stressful effects as it does for those who are not in the same position. If your household debt levels seem to be a significant cause of strain or anxiety, it might be time to start thinking about making some changes. These changes may be something as simple as working out a strict budget or something as complex as a consumer proposal. Whatever the change, reducing your financial stress can be a great way to improve your overall well-being.  

As Canadian consumer debt levels rise, so too does the need to find effective means for debt relief. If you are in the same boat as those thousands of Canadians who struggle to maintain a strong hold on their debt, call DebtCare Canada today to discuss your options: 1-888-890-0888.