Financial troubles and collection agencies or harassing creditors seem to come together in hand in hand.
There is nothing worse than being harassed or hounded by creditors or collection agencies, they call at work, they call at dinner, they disrupt your life. There are horror stories of collection agencies stocking people, showing up at their home in the middle of the night or even at their place of work.
The first step in bringing an end to the fear of collection calls is to understand your rights and your options.
There is a difference between a collection agency and a creditor. You should always deal with your creditor if possible.
What is a creditor- An individual or business who gave credit to a debtor, which has not been repaid, there are 2 types of creditors – Secured Creditor and Unsecured Creditor.
What is a collection agency- A collection agency is a business that obtains or arranges for payment of money owed to either a person or a company. When you have an account with a business that is “past due” or in default, the business may sell your account or turn your account over to a collection agency.
- Keep a log of who calls, time and date of call, name of person that is calling and what is said by them and by you
- Stay calm and be polite and be honest
- Do not make promises you can not keep
- Ask questions:
Will the creditor reduce or eliminate the interest on the debt?
Can the creditor reduce the outstanding amount owing?
Will the creditor extend the timelines to repay the debt?
Can the creditor remove the account from the hands of collections?
There are very specific laws that dictate how debt can be recollected and regulate how collection agencies operate in Canada. National and provincially the laws vary and can be researched in depth at the following agencies.
Understanding your rights is an important first step. Here are helpful links for every province and our federal consumer protection agency, each agency has a process to file complaints against unlawful collection tactics.
Canada – Industry Canada
Alberta – Alberta Fair Trading Act
Manitoba – Consumer Protection Act
Saskatchewan – Consumer Protection Act
Newfoundland – Department of Government Services
Nova Scotia – Service Nova Scotia and Municipal Relations
Nunavut – Community and Government Services
Northwest Territories – Municipal and Community Affairs
Dealing with your creditors is the most important factor – Ignoring the issue like an ostrich is a foolish short term reaction, not a solution.
You do have many options
Finding the solution that suits your specific situation is important. There is no one size fits all solution to debt repayment, being proactive and talk to a good professional will get you on the right track.
Offering less borrowing power against their home, Canadians face fewer options to pay off debt.
The government announced on June 21 2012 it will reduce the maximum amortization period for a government-insured mortgage, lowering it from 30 to 25 years, and also drop the upper limit that Canadians can borrow against their home equity from 85 per cent to 80 per cent.
A far cry from the CMHC rules of 2006, which allowed insurance for 40-year-amortizations, when it also moved to provide mortgage insurance on 100 per cent financing.
All these changes are sparked by the continued indebtedness of Canadians, which sits at a staggering 152 % of their income and growing.
Protecting Canadians from their spending habits the government has changed the rules 4 times in 4 years. Cutting the mortgage duration which stood at 40 years in 2008, dropped to 35 years, then dropped to 30 years and now stands at 25 years. Many of the changes are specifically tied to high ratio, government insured financing.
Refinancing and leveraging properties to a maximum of 80% of their value will form a barrier to prevent Canadians from over extending their credit. As many Canadians struggle to meet their payment obligations at historically low interest rates, the fear of financial destruction will become reality when interest rates rise.
For Canadians using a yearly influx of equity loans, to pay off their debt. That door has now been slammed closed.
We suspect this new cap on home equity borrowing will force many Canadians to face the reality of their spending and debt.
Good people have unfortunate events in their life. Getting back on your feet and rebuilding your financial life is possible.
Here is a helpful 5 step approach to rebuilding credit after bankruptcy or a consumer proposal.
Courtesy of Sands & Associates.
Unless you have been living under a rock. You have heard the warnings. Whether from the Government of Canada, Finance Minister of Canada or the Governor of the Bank of Canada. Canadians are piling on too much debt.
Those debt chickens are going to be coming home to roost. Many families are just making ends meet and some are barely able to make the minimum payments each month. The base interest rate for the Bank of Canada is at 1%. Historically low. If the debt is barely manageable with that low of an interest rate, what is going to happen to those families when interest rates increase by 2%. Every line of credit, unsecured credit card and flexible mortgage rate will rise. It will not rise proportionately to the bank rate. It will rise more, it always rises more and faster. The simple fact that the Bank of Canada announced today that rates will rise faster than expected. That announcement will have the banks increasing rates especially the long term mortgage and financing rates immediately.
Locking in any flexible debt is an immediate solution, lock in your mortgage, your car loan, line of credit or any other interest rate that is secured to an asset. Other unsecured credit, you will feel the pinch as rates increase. How big a pinch depends on the debt and type of financing you are currently using.
Reducing your debt is the best solution. Consolidating your unsecured debt through a mortgage extension or line of credit is a serious step, it takes unsecured debt and makes it completely secured, at the same time the consolidation reduces the value of the asset that the loan is tied to. So what is accomplished, that new dishwasher or trip south, that was such a great deal and you saved so much money when you purchased it on credit, that is now going to have 25 years of interest attached to it as it becomes part of your mortgage payment. Not such a great deal now.
Canadians have added debt at record levels, increasing the interest rate on that debt is going to change the landscape of many households very quickly. If you find you need help and before you consolidate your finances, look at all your options. Talk to professionals, Trustees in Bankrutpcy will be able to give you professional advice. Many Canadians are finding that filing a consumer proposal to reduce debt and lower payments is the best option. This does not reduce the value of your assets and the consumer proposal can actually be bought out or paid off with a 2nd mortgage or line of credit. There are many options available.
Be very careful not to get pulled into debt settlement or debt negotiation, this will only make your situation worse and you will likely end up with more debt. As they charge high fees with no guaranteed results.
Low Interest Rates and Rising Housing Prices = Increased Canadian Debt
Canada has never been in debt as much as their are now. 2012 is likely to be the year when Canadian families reach a new plateau in debt level. Household debt in Canada, was close to 151 per cent at the end of last year. The Bank of Canada’s own analysis expects the ratio to approach the 160-per-cent level reached in the United States just prior to the 2008 financial crisis.
The Canadian debt level has attracted the attention of our high ranking government officials, most notably Minister of Finance, Jim Flaherty and Mark Carney the governor of the Bank of Canada. The Bank of Canada is ready and willing to intervene if the debt levels appear to be a threat to the overall economic stability of Canada.
Mark Carney the Governor of the Bank of Canada states
“We have never been as indebted as we are today as individuals,” he said. “We’ve done analysis which shows that about 10 per cent of Canadians are vulnerable if interest rates returned to more normal levels, which will happen.” The solution on the table is raise interest rates, slow down borrowing.
Yet we Canadians keep borrowing to buy homes, or refinancing, taking out loans against the equity. Accumulating more and more debt. This will have a disastrous effect. Specific areas of Canada, particularly Vancouver are already seeing a drop of over 30% in housing prices for 2012.
This would be the beginning of the perfect storm, if this trend of reduced home prices and highly leveraged mortgages is combined with increasing interest rates. Canadians could end up with it’s very own housing crisis. Homeowners with mortgages that out value the price of the home. Canadians with debt that out weighs their assets.
Why do Canadians file bankruptcy?
Bankruptcy is when consumers stop paying their bills for any reason or have debts exceeding total assets. Almost 130,000 Canadians filed for bankruptcy in 2010, a decrease by 8% from 2010.
The Office of the Superintendent of Bankruptcy in 2011 reported that over three-quarters of consumer bankruptcies/insolvencies originated from Canada’s three most heavily populated provinces: Ontario 51,273 Quebec 36,000 and British Columbia 11,600
What happened to those individuals. OSB statistics surprisingly reveal a wide range of reasons behind Canadian bankruptcies. Many of the instigators are the result of no fault of the individual, they are just a victim of circumstance.
The primary instigators of insolvency and bankruptcy in Canada include:
1. Overextension of credit (22 per cent of all Canadian bankruptcies).
2. Seasonal employment (15 per cent).
3. Job loss (12.8 per cent).
4. Medical problems (11.3 per cent).
5. Relationship breakdown (10.3 per cent).
6. Money mismanagement (9.2 per cent).
7. Failed business (9.1 per cent).
8. Failure to pay taxes (3.6 per cent).
9. Gambling addiction (2 per cent).
10. Inadequate pension (1.4 per cent).
Business failures represent an obvious reason for insolvency. Without sufficient income, owners simply can’t pay their bills. And money mismanagement problems can drive high rollers into bankruptcy where wild spending exceeds earnings.
Not paying taxes, gambling addictions and tiny pensions cause relatively fewer bankruptcies, but still represent serious financial problems to many Canadians.
If you find yourself having questions regarding your debt, you need solutions and professional help. Let us help you, we have a nationwide network of licensed Trustees in Bankruptcy that will be able to assist you.
Holidays are over, got everyone fantastic presents, celebrated and had maybe a bit too much fun!
If you had a large amount of credit card debt before the holidays, chances are that you now have even a larger amount of credit card debt, potentially your credit cards are maxed out to the limits.
We can help now. Reduce Your Payments Up to 50%
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Federally Licensed Trustees in Bankruptcy & Certified Credit Counsellors
Learn about your debt relief options to lower your monthly payments, interest, and consolidate your payments.
Bankruptcy is not your only option, talk to someone in your neighbourhood about how a Consumer Proposal will benefit your financial situation and give you a Financial Fresh Start for 2012.
You are in debt, you need help, you don’t know where to turn.
What are your options.
So many new debt options for Canadians, they all promise to reduce the debt levels, reduce payments and end debt struggles. Life with 70% less debt. That sounds fantastic, where to sign??
There are a lot of new players in the debt market. Or perhaps I just appears that there is new players, perhaps they are just marketing more aggressively.
I was wondering last night why is Alan Thicke on my TV, telling me that I do not have to pay back my credit card debt? It got me wondering who is Cambridge Life Solutions. Why is the government of Canada warning us not to pay up front to solve our debt problems? And why did Alberta pass a law this week to end prepayment of fees to complete a debt settlement?
Needing answers, the research began.
The concept seems bizarre. Talk to someone over the phone, never actually meet them, pay a big initial deposit up front for a settlement service. Quit paying your credit cards and other unsecured debt. Make a monthly payment to the Settlement Company, they take a cut ( 20% more or less) and then they deposit the rest into a “special” account for the creditors. Keep doing this for months and then Wait, Wait, Wait, watch your credit rating get worse and then eventually the debt settlement company tries to negotiate with your creditor.
So why wait to negotiate? Seemed like a good question. Why not just call the creditor immediately and negotiate a better settlement.
The reason is the company has to wait and wait, until they have enough clients and enough pooled money from all the clients. This pooled money, is then presented to the creditor of choice as a “settlement”. There appears to be no legal reason for the creditor to accept the lower payment. There also appears to be a very high rate of failure for debt settlement plans, debt relief. Summary, you paid a large sum of money and are actually worse off then when you started. Well that answers the question of why the Government is warning consumers and why Alberta has enacted a new law, preventing payment in advance of finalized settlement.
Back to my Question, Who is Cambridge Life Solutions?
That was easy information to find, Government of Canada has them registered as Trade Mark. The trademark was not established until 2011-08-26 and this is interesting, not only have they only been in Canada since Aug 2011, the company is from California. A lawyer in Canada registered the company for Jorge Fortune. Yes, you read that correct, Jorge Fortune! Perhaps an indication on how much money he makes on the system. Mr Fortune, runs the company from Santa Ana, California. The trade mark indicates services Debt management services and debt settlement negotiation services.
Last puzzling question that I needed to research, why all the fuss now, what is the attraction to Canada.
As Cambridge Life solutions certainly is not the only ad running on my tv or popping up on my computer. Every ad for debt claiming to have the best solutions for Canada Consumer Debt Problems. Is there so much debt in Canada that we have to have all these new companies looking for business? Actually, although our consumer debt ratio is higher than ever, we are seeing a reduction in bankruptcy filings over last year.
The actual reason for the new interest in Canadians and their debt, is the new regulations in the US. The FTC, Federal Trade Commission, now regulates the US debt settlement industry. In the US these companies are now required to fully disclose: how much the settlement is actually going to cost, any negative consequences and how long it will take to complete a settlement. New US law go against the business model in the US, so they brought it to Canada, where there is no regulation. (Except Alberta as of this Week) .
Tax Season is coming… AGAIN.
Whether you have been delinquent in filing your returns over the past few years or unable to pay your outstanding balance. If you find yourself looking for an Easy solution to tax debt Revenue Canada, they are the mightiest creditor of all. The can and will take further action to recover the balance of tax debt owing. Revenue Canada has the power to cease assets, such as your bank account, your home, your car or garnishing wages and they can also withhold your GST and Child tax credit until all outstanding tax balance is paid. Tax Debt must be taken seriously.
Already owe back taxes from previous years?
There are TAX DEBT SOLUTIONS, people are often asking: Can I make a deal with Revenue Canada for the taxes I owe?
Yes! It is possible to make a deal with Revenue Canada, on your own. The solution would be not to pay the balance of taxes owed, in one lump sum. Revenue Canada may accept an offer, that would allow you to make monthly payments. That monthly payments will be subject to interest and penalty until the balance is paid in full.
Revenue Canada will very rarely negotiate a lower balance with any Canadian owing outstanding tax balance. Should Revenue Canada makes a deal for less taxes from you, well they would have to apply that tax deal to every Canadian.
Revenue Canada will reduce the amount of tax you owe!
Yes, you can get a tax debt settlement. Only a bankruptcy trustee licensed in Canada can get you relief of your tax debt. There are 2 possible methods, filing a consumer proposal or filing bankruptcy. Either method will give you instant protection from Revenue Canada. Meeting the criteria for a consumer proposal is complicated but not difficult. Many Canadians find a Consumer proposal an ideal solution to Tax debt relief. Revenue Canada, as most creditors, prefer to accept the conditions of a consumer proposal, as they will recover more of the outstanding balance then if the person files bankruptcy.
Have not filed your taxes in years?
If you are aware of an outstanding tax debt problem, and your solution was just not to file your taxes. That would be similar to putting a bandaid over a gunshot wound. Not a good long term solution!
Bankruptcy trustees are very often accounting firms, part of the regulation dictated in the BIA, Bankrupcty Insolvency Act, is that the person filing bankrutpcy must have a pre and post tax return completed. As the Trustee in Bankruptcy is required to complete the tax returns, in order to file either a consumer proposal or bankruptcy, the service is most often included in their fees. No need to go out and pay another company prepare your back tax returns, the trustee will complete them for you.
Confused about how much you owe to Revenue Canada and what your options are Contact a Bankruptcy Trustee for a free assessment on how to get your tax debt relief.
There is always Hope.
Making the come from behind play. Seeing the way through the tough times. Nobody said it would be easy. All sayings and words of wisdom that apply to the country, companies and people suffering in debt.
Canadians and Americans will find inspiration from the is Clint Eastwood video.
He compares the state of the country and people to the come back of Chrysler. A company that declared bankruptcy and now after a Canadian and American bailout was able to declare profitablility again, the first time since 1997. Personal bankruptcy is not the end, it is the beginning. A fresh start that many individuals and couples realize was a positive move forward and now they only wish that they have been done so much earlier.