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Debt Help FAQ’s - Credit Card Debt

Credit Card Debt

1. When should I seek assistance with my credit card debt?

If you find yourself paying your credit card bills late or simply making the minimal payments on a regular basis, you might want to look into debt relief options. You can learn more about filing a consumer proposal to consolidate your unsecured debt and leaving you with extra money for savings if you rely on credit cards as a source of financing.

2. What is the minimum amount of credit card debt I need to make a consumer proposal?

If you owe between $1,000 and $250,000 in unsecured debt, you can file a consumer proposal and have a Licensed Insolvency Trustee negotiate with your creditors to return all or part of your debt.

Payday Loans 1. What is the highest amount a payday loan can cost me?

You can be charged up to $23 every $100 borrowed in Alberta, Saskatchewan, and British Columbia. In Ontario, the maximum loan amount is $21 per $100 borrowed. You can be charged a maximum of $17 every $100 borrowed in Manitoba. In Nova Scotia, it costs $22 for $100 dollars borrowed. There are currently no provincial laws in place in the provinces of Newfoundland and Labrador and New Brunswick, therefore the restriction is limited to the federal government's annual cap of 60% interest on payday loans.

2. What are my rights, and how can I defend myself against predatory payday loan practices?

You can find a breakdown of your rights by looking up your province's payday loan legislation online. If you're stuck in a never-ending payment cycle, talk to one of our Licensed Insolvency Trustees about your options for repaying a payday loan. Fill out our online form to request a call.

1. Can I mention my student loan debt in a consumer proposal or bankruptcy before the seven-year mark?

Student loan debt cannot be dismissed for seven years before you stop being a part-time or full-time student, according to the Bankruptcy & Insolvency Act, but you may be eligible to take advantage of hardship provisions. You may also be able to use a consumer proposal to consolidate your other unsecured debts, leaving you with more money to put toward your school debt. Learn more about how to make a consumer proposal.

2. What does the hardship clause entail?

If you are or have been bankrupt and have not been a part-time or full-time student for more than five years, you can apply to the court for an early discharge of your student loan debt under the "hardship provision." On the Government of Canada's website, you may learn more about the hardship provision process.

Income Tax Debt 1. Can I set up a payment plan with the Canada Revenue Agency on my own?

You may be able to create a payment plan with the CRA, which would allow you to make smaller payments to them over time until you have paid off your total amount. Visit the Canada Revenue Agency's website to learn more about this procedure.

2. What if I don't pay my taxes on time?

If you don't pay your taxes, the CRA can take a variety of actions against you, including garnishing your wages, freezing your bank accounts, putting a lien on your property, and seizing or selling your other assets, depending on your situation. If you're having trouble paying your tax obligation, our Licensed Insolvency Trustees can work with the CRA on your behalf to come up with an acceptable repayment plan and stop any legal action. Request a call right now.

Mortgage Debt 1: Why can't my mortgage debt be included in a consumer proposal or bankruptcy?

Your mortgage is a secured obligation, which means it's guaranteed by something tangible. It must be paid or your lender may repossess your property (the bank). If you're having trouble making ends meet, go to our Debt Relief Options page for further information on how to pay off unsecured debt, such as credit cards, so you can keep up with your mortgage payments. Alternatively, you can call one of our Licensed Insolvency Trustees, who will examine your financial circumstances and provide you with a customized debt relief option.

Loans for Debt Consolidation

1. What are the benefits of a debt consolidation loan?

Credit consolidation allows you to reduce your monthly payments by making one payment to your bank at a lower interest rate rather than many payments. Check to see if the interest rate on your newly combined loan is lower than the interest rate on your other obligations. If you don't qualify for a credit consolidation loan, speak with one of our Licensed Insolvency Trustees, who will explain all of your debt relief alternatives so you can choose the best course of action for repaying your debts.

2. How can I find out if I'm eligible for a credit/debt consolidation loan?

If you have a job or another source of income, you may be eligible for a debt consolidation loan. However, take in mind that not everyone will be eligible for a consolidation loan. Your total debt load, proportion of credit used, and history of making minimum payments will all be taken into account by a bank, and depending on how you rank in these categories, your credit score may already be harmed, preventing you from qualifying. However, this is simply one of many debt reduction solutions available.

3. What is the difference between a credit consolidation loan and a debt management plan?

No. With a debt management plan, you pay a credit counselor, who then negotiates with your creditors to lower your interest rate and distributes payments to your creditors on your behalf. You pay the bank directly with a cheaper interest rate when you take out a credit consolidation loan.

Credit Counseling Organizations

1. How do I know I'm dealing with a reputable credit counseling firm?

While many credit counseling agencies are certified, it's worth noting that they aren't required to be. The names "credit counsellor" and "debt management consultant" are rather general, and anybody can use them in some regions.

So, when you go to a credit counselling agency, make sure it's a member of a national or provincial professional organization, such as the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) or Credit Counselling Canada. Confirm a counsellor's or consultant's qualifications and memberships in professional organizations when meeting with them. Make sure you get a written plan outlining how you'll be supported, as well as a monthly statement of payments.

2. How can you tell the difference between a non-profit credit counseling agency and a debt settlement firm?

A non-profit credit counselling agency can assist you in organizing your debt through a debt management plan and can also provide educational programs to help you improve your financial situation. They are frequently qualified, but as previously stated, they are not required to be, so check their credentials when you see them for a consultation.

A debt settlement firm has a completely different business model. Creditors and debt collectors frequently do not recognize them as legitimate and will not engage with them. This is crucial to remember if you decide to pursue a debt settlement strategy. If you're thinking about hiring a debt settlement firm, make sure you understand the services they'll be providing you with and get a signed contract or statement.

Plans for Debt Reduction

1. How is a debt settlement plan different from a debt management plan (DMP)?

A credit counselor will negotiate with your creditors to lower the amount of interest you must pay on your debts as part of a debt management plan. You repay your debt in full, but you may make fewer payments due to a lower interest rate or a longer payment period.

In a debt settlement plan, on the other hand, the debt settlement firm will have you cease paying your creditors in order to persuade them to reach an agreement with the settlement company acting on your behalf. You will instead be paying the corporation to accumulate a lump sum in a holding account. For several months, no contact is made with your creditors, and the lack of payments to your creditors can result in a worsened credit score while you wait to build up a lump sum.

Furthermore, many creditors refuse to accept debt settlement agreements since debt settlement organizations are not licensed debt professionals and lack certificates. You'll have paid the debt settlement business, but you won't have gotten a debt solution.

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