Getting Prepared: Consolidate Your Debt Long Before the Holidays

With the end of September fast approaching, that means the seasons are officially changing. It also means that the holiday season is only 3 short months away. If you are in debt, this can become a stressful time, very quickly. People often rack up considerable debt over the summer months, with family vacations and the like - but once the summer is over, it comes time to face reality once again, and for many that means dealing with that mountain of debt.

Instead of continuing to put it off, why not establish a plan to deal with the debt sooner, rather than later. Use these tips to help get yourself prepared.

     1. Start with a budget. Look at your monthly payments, where you spend your money on a regular basis. An easy way to do this is with a budget template - one that includes all incoming and outgoing costs. Then think about where you can cut back. Perhaps you can eliminate some of the unnecessary expenditures, instead using that money to pay off your debts.

2. Look at the debt you have. How long have you owed the money, who do you owe the money to, and how much interest are you paying versus what is going onto those balances? Are you only making minimum payments and not actually paying down the debt?

3. Once you’ve examined your debt situation, consider your debt repayment options. Restructure debt if necessary – minimum payments don’t pay down debt.

4. Get a professional financial consultation to learn your consolidation options – while focusing on long and short term financial goals. Consolidating all of your debts may be easier than you think - and the various options available may actually save you a lot of money in the long run.

5. Start saving. With the money that will be required for gifts, why not start putting away a little bit every paycheque? You might be surprised at how much this will take from your shoulders come December.

With the holidays coming up fast, make this the year you go into the season debt free. Eliminate the stress that this time of year can bring, and instead use it as a time to enjoy family and friends, without having to worry about what the New Year will cost you.

Rather than racking up holiday debt and crying over those bills in January, why not come up with a financial plan now? Call DebtCare Canada today at 1-888-890-0888.

Financial Focus: Wage Garnishments in Ontario

Nothing is worse than getting your wages garnished, and it seems as though this is happening with increased frequency - many Canadian individuals are facing wage garnishments in Ontario as a result of debts in collections, CRA tax debts, or Family Responsibility.

No matter how you slice it, wage garnishments are brutal, and carry with them various personal and professional consequences. For example, not only will this type of collection action cause personal financial hardship, making bill payments incredibly difficult, it can also impact your professional life. Since wage garnishments are sent to employers, once your employer learns of your financial troubles, your reputation will be impacted, and this could have important and costly ramifications. Additionally, if you own your own business, it will be your clients that receive notice to garnish receivables, thereby impacting your reputation.

Facts about wage garnishments in Ontario:

-      If you don’t pay your debts, your creditors can take you to court and obtain a court order to have your wages garnished. However, some creditors, the CRA as the most common one, don’t need a court order and can simply send out a Requirement To Pay notice and the deed is done.

-      Under the Ontario Wages Act, a creditor can garnish up to 50% of your gross wages, depending on the organization owed. The actual amount is determined by the court, but typically garnishments in Ontario are around 20%. That being said, if you are self-employed, and owe money to the CRA, a garnishment can get as high as 100% of your receivables.

-      Wage garnishments can be stopped. Some people assume that once a garnishment is in place, it will remain in place until a debt is paid in full. While this is one way to remove a garnishment, it is not the only one.

o       Negotiating a voluntary arrangement with a creditor is an option, although once a creditor has gone through the trouble of garnishing you they are not going to easily let go and may still demand payment in full.

o       Going to court is another option. Keep in mind that this can get expensive, especially if it is tax court. This is because in small claims court you may represent yourself, whereas in tax court you usually need a lawyer.

o       A third option is working with a debt counsellor on a consumer proposal. For many Canadians, this is the option that makes the most sense, often because it will not only stop a wage garnishment in its tracks, it will also freeze interest, consolidate all unsecured debts into one monthly payment, and will often result in a much smaller balance to be paid off.

Wage garnishments in Ontario can quickly turn a financial issue into a financial nightmare. Once a creditor has leveraged this form of collection action, removal may be difficult, but it is not impossible.  You have options.

For more about having a wage garnishment lifted, please contact DebtCare Canada today by calling 1-888-890-0888.

Faceoff - Canadian Bankruptcy Trustees vs. Canadian Debt Counsellors

When you are struggling to make even the minimum monthly payments to bills, or worse, having to choose which bills to pay each month, it is probably time to consider professional financial help to get things back on track. But how can you best determine which route is the right one, and who you should elect to stand in your corner? We can help. Today’s topic: the financial faceoff - Canadian bankruptcy trustees vs. Canadian debt counsellors. Both can help you get out of debt - but not necessarily in the same way.

Trustees

A Canadian bankruptcy trustee is a court appointed officer, appointed by the Superintendent of Bankruptcy. Their role is to administer bankruptcies and consumer proposals - but to do so on behalf of the interests of all parties. They don’t represent you as the client, they represent both you and your creditors. This means that, since they are not your representative, they can use the confidential financial information you provide to them to get the best deal for your creditors. They are paid out of the estate in the case of bankruptcy, and out of your pocket in the case of a consumer proposal, so their paycheque is then determined by how much is paid by you to your creditors.

Debt Counsellors

Often bankruptcy trustees like to say that you don’t need to pay a debt counsellor, and can just go right to them. This is because if you do this they can control the filing – which is especially enticing in the case of consumer proposals, where, as mentioned above, the more you pay, the more they earn.

Instead, debt counsellors are paid by YOU, they represent YOU and only YOU. They know insolvency inside and out and you can trust that any information you provide to them is not going to be used against you - you can tell them everything without fear of unanticipated consequences. The role of a debt counsellor is to structure your financial information, assist you in finding a good trustee, and to help you manage negotiations with a trustee.

Both bankruptcy and consumer proposals represent important and viable solutions when debt becomes unmanageable. That being said, going right to a trustee and hoping for the most favourable outcome will often leave you disappointed.  Consider speaking with a debt counsellor first and having them negotiate a consumer proposal or bankruptcy on your behalf - NEVER go to a bankruptcy trustee unrepresented.

For more about the difference between a Canadian bankruptcy trustee and a Canadian debt counsellor, please contact DebtCare Canada today at 1-888-890-0888.

Back to School Blues? Consolidate Credit Cards and Stop the Interest

The back to school season, particularly for parents, is often a very hectic time of year, especially with regard to finances. The need/desire for new school clothes, shoes and supplies often leaves parents with racked up credit cards once all is said and done - or rather, purchased. And often accompanying these credit card bills is the challenge of finding money to pay them off.

Check out this infographic from BMO to see just what these costs add up to:

So, what options are available? Consolidating credit cards is a great way to reduce your debt - and often makes sense – but the type of consolidation depends on your own personal circumstances. Here are a few options that may be available to help you deal with that back to school debt.

1.    Home equity loan. By using the equity in your home, you can consolidate credit cards, thereby reducing interest and consolidating the various bills into one monthly payment. Of course, this is only possible if you own a home and have sufficient equity for this purpose. If you rent, or are without equity, this is probably not going to be a viable option for you.

2.    Consumer proposal. This is another great option, especially if your credit isn’t great or if you don’t have the security or equity for a loan. A consumer proposal will have some impacts on your credit in the short term, but this is balanced out by the fact that interest stops accumulating, there is, like a loan, just a single monthly payment, and in many cases the overall debt owing is reduced. 

3.     Line of credit or loan from a lender. This is another good option, and can achieve the same things as a home equity loan: lower interest and one monthly payment. You will need to have good credit or security for this option. At the same time, this is often the most expensive option of all because it will involve higher interest than a home equity loan or a consumer proposal.

Kids are expensive, and when back to school season rolls around, they can become even more so. Once those bills start coming in, don’t stress. 

Call DebtCare Canada to find out about how to consolidate credit cards and get rid of debt: 1-888-890-0888.