Credit Card Debt

When should I get help with my credit card debt?

You might consider seeking debt relief options if you find you’re frequently paying your credit card bills after they’re due or regularly making only the minimum payments. If you’re relying on credit cards as a source of financing, you can find out more about filing a consumer proposal to consolidate your unsecured debt and leave you with more money for savings.

How much credit card debt should I have to be able to file a consumer proposal?

If you have between $1,000 and $250,000 in unsecured debt, you could file a consumer proposal and have a Licensed Insolvency Trustee negotiate to repay all or only a portion of your debt.

Payday Loans

What is the maximum amount I can be charged for on a payday loan?

In Alberta, Saskatchewan, and British Columbia, you can be charged up to a maximum of $23 per $100 borrowed. In Ontario, it is a maximum of $21 per $100 borrowed. In Manitoba, you can be charged a maximum $17 per $100 borrowed. In Nova Scotia, it costs $22 per $100 dollars borrowed. In the provinces of Newfoundland and Labrador and New Brunswick, no provincial regulations have been set as of yet, so the restriction is up to the federal government’s cap of 60% interest on a payday loan per year.

What are my rights and how can I protect myself from poor payday loan business practices?.

You can check online with your province’s regulations on the payday loan industry for a breakdown of your rights. But, if you’re finding yourself in a never-ending payment cycle, contact one of our Licensed Insolvency Trustees who will walk you through your options to paying off a payday loan. Request a call by filling out our online form.

Student Loan Debt

Can my student loan debt be included in a consumer proposal or bankruptcy before the 7 year mark?

The Bankruptcy & Insolvency Act states student loan debt cannot be discharged for seven years before you have ceased to be a part-time or full-time student, but you may be able to take advantage of hardship provisions. You might also be able to consolidate your other unsecured debts through a consumer proposal, which could leave you with more money to put towards your student debt. Learn more about the consumer proposal process.

What is the hardship provision?

If you are or you have been bankrupt and it has only been five or more years since you ceased to be a part-time or full-time student, you can apply to the court for an early discharge of your student loan debt under the “hardship provision.” You can learn more about the hardship provision process on the Government of Canada website.

Income Tax Debt

Can I setup a payment arrangement independently with the Canada Revenue Agency?

You might be eligible to enter into an agreement with the CRA to make a payment arrangement, which would allow you to make smaller payments to them over time until you have paid your entire debt. To learn more about this process, visit the Canada Revenue Agency website.

What happens if I don’t pay my taxes?

If you don’t pay your taxes, depending on your case, the CRA can take a number of measures against you including a wage garnishment, seizing your bank accounts, registering on your home and seizing or selling your other assets. If you are having a hard time repaying your tax debt, our Licensed Insolvency Trustees can negotiate with the CRA on your behalf to create an affordable repayment plan and stop any legal action taken against you. Request a call today.

What is the hardship provision?

If you are or you have been bankrupt and it has only been five or more years since you ceased to be a part-time or full-time student, you can apply to the court for an early discharge of your student loan debt under the “hardship provision.” You can learn more about the hardship provision process on the Government of Canada website.

Mortgage Debt

Why can’t I include my mortgage debt in a consumer proposal or bankruptcy?

Your mortgage is a secured debt, meaning it is backed by an asset. It must be paid or you risk having it repossessed by your lender (the bank). If you are having difficulty making ends meet, you can visit our Debt Relief Options page for more information on how to pay off your unsecured debt like credit cards to allow you to maintain your mortgage payments. Or, you may contact one of our Licensed Insolvency Trustees who will carefully assess your financial situation and provide you with a tailored solution for debt relief.

Credit Consolidation Loans

What is the advantage to a credit consolidation loan?

Through a credit consolidation, you can lower your monthly payments by making one payment to your bank at a lowered interest rate, instead of multiple. Make sure that the interest rate on your newly consolidated loan is actually lower than your other debts. If you don’t qualify for a credit consolidation loan, contact one of our Licensed Insolvency Trustees who will take the time to explain all of your debt relief options so you can choose the best course of action for paying off your debts.

How can I qualify for a credit/debt consolidation loan?

You may qualify for a consolidation loan if you have a job or a source of income to allow you to repay it. But keep in mind that qualifying for a consolidation loan might not be possible for everybody. A bank will account for your total debt load, percentage of credit used, and history of making minimum payments and depending on how you rank in these categories, your credit score may already be impaired, which would prevent you from qualifying. But, this is still only one of many debt relief options.

Is a credit consolidation loan the same as a debt management plan?

No. With a debt management plan, you pay the credit counsellor who negotiates with your creditors to reduce the interest rate on your debts and then distributes payments to your creditors on your behalf. With a credit consolidation loan, you pay the bank directly at a lowered interest rate.

Credit Consolidation Loans

How can I be sure I am dealing with a trusted credit counselling agency?

While many credit counselling agencies are certified, it’s important to note that they don’t have to be. The terms “credit counsellor” and “debt management consultant” are relatively generic and in some provinces, virtually anyone can use these titles.

So, make sure that when you are visiting a credit counselling agency, that it is affiliated with a national and/or provincial professional association, like the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) or Credit Counselling Canada. As well, when meeting with a counsellor or consultant, confirm his or her qualifications and memberships in professional bodies. Also make sure to receive a proposal of how you will be helped in writing, along with a monthly statement of payments.

What is the difference between a not-for-profit credit counselling agency and a debt settlement company?

A not-for-profit credit counselling agency helps you organize your debt through a debt management plan and they offer educational workshops for improving your finances. They are often certified, but as mentioned above, they don’t have to be, so make sure to check their credentials when you are visiting them for a consultation.

A debt settlement company operates with an entirely different business model. They are often not recognized by creditors or debt collectors as legitimate and will often not negotiate with them at all. This is important to keep in mind if you decide to follow a debt settlement plan. If you are considering using a debt settlement company, make sure that you have a clear understanding of the services they will be providing you, and ask for a written contract or statement.

Debt Settlement Plans

What is the difference between a debt settlement plan and a debt management plan (DMP)?

With a debt management plan, a credit counsellor will negotiate with your creditors to reduce the amount of interest you have to pay on your debts. You pay back 100% of your debt, but it may be smaller payments through either a lowered interest rate or an increased time period over which you have to pay.

On the other hand, with a debt settlement plan, the debt settlement company will have you stop making any payments to your creditors in order to encourage them to reach a deal with the settlement company working on your behalf. Instead, you will be paying the company to build up a lump sum in a holding account. No contact is made with your creditors for several months and while you wait to build up a lump sum, the lack of payments to your creditors can result in a worsened credit score.

In addition, because debt settlement companies are not licensed debt professionals and have no certifications, many creditors refuse to accept their settlement plans. You will have paid the debt settlement company, but you will not have achieved a solution to your debt.

Consolidation Orders and Voluntary Deposits

How do I get a consolidation order or voluntary deposit?

If you reside in the provinces of Alberta, Nova Scotia, or Quebec, you can go to your local court house to register for a consolidation order, or as it is known in Quebec, a voluntary deposit. The court will combine your debts into one and determine the amount that you must pay them every month. The court then distributes the payments on your behalf to your creditors.