Can a Collection Agency Issue a Wage Garnishment?

It is a very common scenario: you’re aware of the existence of a bad debt, but with no means to pay the debt, you instead choose to ignore the calls and notices and hope that you can eventually amass the funds to pay it in full - or just hope that it will eventually go away. Then payday rolls around, and with the intention of taking even just a little bit aside to pay the debt, you find that the creditors have already taken matters into their own hands and issued a wage garnishment - and the amount on your paycheque is far lower than expected.

If this is the position in which you’ve found yourself, you might be wondering how it even came about. Can a collection agency even issue a wage garnishment - how do they have this power? The ugly truth is that yes, although a collection agency is a third party, it does have the power to secure a wage garnishment when going through the proper channels.

When you have a debt that you can’t pay, and a creditor assigns the account to a collection agency, that agency may just choose to pursue the matter in court - in order for a garnishment to be leveraged against you, obtaining a judgement in court is first required.

Does this mean you are being sued? No, the only people who can sue in Ontario courts are lawyers, paralegals, and people representing themselves - meaning, if a creditor has the time and resources, they could choose to sue you. Many don’t, but will pass the matter along to a collection agency, one who will then seek a judgement.

A collection agency can apply on a creditor’s behalf to court to seek a “garnishment” against you. If granted, this legally allows them to seize your salary, money in your bank account, or other money you own to repay your debt.

Often when collection agencies threaten to sue on behalf of the creditor, it is to scare you into paying – but there are many instances where it is not an empty threat and a wage garnishment may be imminent.

If collectors are calling and delivering these threats, a wage garnishment may be headed your way. It is best to deal with the debt before a garnishment is issued, thereby mitigating further damage to your already bruised credit.

These are your options:

•Pay the debt in full - although if this really was an option we hope most would have already done it.

•Make a settlement with the collection agency - sometimes this works, other times it is easier said than done.

•Look at other options to settle the debt and stop collection action, such as filing a consumer proposal.

Once a debt goes to collections it won’t just go away – your creditor will just keep assigning it to different agencies and using different tactics to force you to pay.

If you are standing on a ledge with seemingly no resources at your disposal, don’t despair. DebtCare Canada can help you find a solution to your financial problem and get a wage garnishment lifted before it does more damage. Call us today at 1-888-890-0888.

Repairing Bad Credit – What to Do When Old Items Just Won’t Go Away!

When money is tight, and bills can’t always be paid, choosing one bill over another may seem like the lesser of two evils. What can it hurt, letting a bill go unpaid, then planning to pay it the following month? Then next month’s statement comes, and the amount owing has doubled, so you opt to pay it and leave a different bill unpaid. What originally seemed like a solid plan has quickly turned into a nightmare. When this is the case, repairing bad credit becomes incredibly difficult.

However, once you regain control of your finances, those items listed on the credit report should just disappear, right? After all, you are managing your money more effectively and not missing any bills. Unfortunately this isn’t how it works. This is especially true when items are sent to collections.

Evolution of an erroneous collection item on your credit report:

-You get behind with bills, and when bills are not paid monthly, these are reported to your credit report, causing trade lines for the credit product to go into default.

-Eventually that account is assigned to collections and a second item for the same debt is registered.

-Over time the account is cancelled with the collection agency and then assigned to another one, but the first one didn’t remove their item. The new collection agency now registers an item.

-Fast forward 7 years - when you would assume everything should be gone - but all 3 items are still on the credit report and it feels like they are impossible to get rid of! So what can you do as far as repairing bad credit?

Credit reporting agencies are regulated and have to follow the Consumer Reporting Act. They are regulated by the Ministry of Government and Consumer Services. According to the Act, after 7 years of no activity on an account (activity is a payment, using the account, writing off the account, etc.) it should be removed from the credit report. However, sometimes this does not happen.

What are your options? Should you just continue to wait and hope for the best? No. There is no guarantee that the agency even knows about the mistake - they probably do not. This means you have to get your credit report, prove that no activity has taken place, and then start the battle with TransUnion and Equifax.

Great, a battle has to take place? The pen may be mightier than the sword, but that doesn’t necessarily mean these agencies are apt to read whatever you’ve written. Sometimes it takes a bit more pushing and shoving to get the job done. What you need is someone in your corner who can take up arms in your defense, a representative with the knowledge and understanding of both how these agencies function as well as the importance this issue holds for your financial stability.

Bad credit makes it almost impossible to do anything, things like financing a home or car, and if you get the financing interest rates will be sky high! Don’t let the prospect of repairing bad credit scare you - it needs to be done.

DebtCare Canada has a brand new program that places a representative in your corner - someone with the ability to deal with TransUnion and Equifax and have old items removed from your credit report. When it comes to repairing bad credit, call us for help: 1-888-890-0888.

In the News: Who is Filing for Bankruptcy? A lot of Seniors it Seems

With Canadian consumer debt on the rise, it is no surprise that filing for bankruptcy has become a popular form of debt relief. The ability to combine all debts and make one monthly payment, as well as the ability to halt collection calls and collection action, has proven to be quite appealing for a vast number of people.

Accordingly, a vast array of individuals from diverse demographics are choosing this option -but which group is most likely to go this route? According to a recent CBC News article, it seems a lot of seniors are filing for bankruptcy as a way to get relief from debts that have piled up.

The article states, “According to a review of 6,000 insolvency filings handled…in 2013 and 2014, the share of debtors aged 50 and over increased to 30 per cent compared with 27 per cent in the previous two-year period,” with credit cards and payday loans representing the debts of highest concern.

The report also found that seniors and those in pre-retirement have accumulated the highest unsecured debt load among all age groups: “On average, debtors 50 and older filing for insolvency had $68,677 in unsecured debt, while those over 60 had total unsecured debt of $69,031.”
You can read more about this here: http://www.cbc.ca/news/business/seniors-in-ontario-make-up-30-of-bankruptcies-report-1.3060463.

Furthermore, according the Globe and Mail, several factors have contributed to this, including the higher number of personal loans being granted to adult children. For seniors with children, a loan to a child has become quite common, and although intentions may be good, often these loans go unpaid, leaving parents in a position of financial strain.

Additionally, seniors are the ones with the highest unpaid tax bills owed to the Canada Revenue Agency. Read more on this here:  http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/growing-number-of-seniors-account-for-ontarios-insolvency-filings-study/article24236617/.

This rising senior debt, coupled with the fact that income is generally less in the post-retirement years, has led many seniors to turn to trustees for assistance. And this isn’t a bad idea in theory. Why start retirement owing more that you can afford to pay? The only problem is that, without understanding the process in detail, many turn directly to those trustees, rather than to a representative.

Why is this an issue? Bankruptcy trustees are looking out for the interests of creditors, not just the person filing. However, a personal representative, one with the debtor’s interests in mind, can ensure protection throughout the process, lessening the risk.

If you are worried about debt in your retirement years, a fresh start thanks to filing for bankruptcy may just be the answer. Just make sure that you are protected. Call DebtCare today. We represent you - not your creditors, and can work towards a fair and objective result. 1-888-890-0888.

Need to Know: What is a Consumer Proposal?

It is no secret that many Canadians struggle with debt. The ease with which credit is granted, followed by the difficulty in trying to resist the temptation to buy what we perhaps can’t necessarily afford, means that Canadian consumer debt seems to continually grow, even when we are continually cautioned.

With this consumer debt comes the need for debt relief. Debt relief can take many forms, some more well-known than others. This week we are looking at one of the most popular forms, the consumer proposal, and answering a common inquiry: what is a consumer proposal.

Similar to a bankruptcy, a consumer proposal is a legal solution for dealing with debt. That being said, it is not a bankruptcy, and in many cases individuals find consumer proposals to be better when it comes to assets. For example, many people who opt for consumer proposals are able to keep their homes or cars.

So, what is a consumer proposal? When you are in debt, and can’t seem to get any traction as far as paying it off, you may choose to make a proposal to your creditors, based upon an income and asset calculation. This is a consumer proposal. In this proposal, you offer to pay creditors either all or a certain percentage of the debt owed, monthly, over a term of typically 4-5 years. The amount of your proposal is based upon your income/assets and your ability to pay.

Once this proposal is presented to your creditors, they have a finite period of time to vote to accept or reject it. Once accepted, this becomes a legally binding contract between you and your creditors, and you begin making the monthly payments.

Benefits of a consumer proposal:

·         Debt is usually reduced in a proposal but even if it is not the proposal will stop interest from accumulating.

·         A consumer proposal stops collection action being taken by unsecured creditors, such as wage garnishments, frozen bank accounts, etc…

·         A consumer proposal can be paid in full at any time, and will be removed from your credit report 3 years following the date in which it is paid in full.

A consumer proposal is a legal solution, one covered under the Bankruptcy and Insolvency Act, and while it is not a bankruptcy, it is administered by a trustee.

Something to keep in mind: a bankruptcy trustee is an administrator who earns money based on the size of the proposal negotiated. They do not represent you – they are a court appointed officer with a job to ensure that you make a proposal that is a win for your creditors. This can be confusing because many trustees advertise solutions as though they represent you, when in fact they are more subjective than that, and often working for their own best interests.

A proposal is a good solution, but you should not make one through a trustee unrepresented. A representative represents you so you can speak openly without consequence. A representative can negotiate the deal on your behalf with the trustee, and can often negotiate a more competitive deal than had you gone directly to the trustee.

So, what is a consumer proposal? A very viable debt relief option - but one that you should know all about before contacting a trustee. Call DebtCare today - we represent you, not your creditors. 1-888-890-0888.

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.