A War on Wages: Are You Suffering from a Wage Garnishment?

Arguably one of the most embarrassing things that one can endure is a wage garnishment. It is bad enough to have to walk around with a demanding debt looming over your head, but often no one else needs to know about that debt. Once a wage garnishment has been put in place, that level of privacy is gone and your employer is going to know about the debt. If a creditor is going to war on your wages, your situation has inevitably become far more serious.

When it comes to wage garnishments in Ontario, there are a few different types, some of which come with more warning than others. That being said, in most cases those suffering from wage garnishments know that enforcement action is coming as a result of defaulting on debts or refusing to pay a creditor.

Court-ordered garnishment: When a creditor sues you in civil court for unpaid debts, and successfully obtains a judgement against you, they can then proceed to serve a notice of garnishment to your employer to garnish your wages. In Ontario, upon receipt of such a notice, an employer is legally required to remit up to 20% of your earnings to the court to then be dispersed to your creditor. In this instance, the only ways to get the wage garnishment removed are to pay your creditor in full, make a motion and ask the court to remove or reduce it, or seek intervention from a Licensed Insolvency Trustee.

Canada Revenue Agency (CRA) garnishment: Unlike other creditors, CRA does not need a court order to have your wages garnished. The agent assigned to your case simply needs to send a requirement to pay notice to your employer requiring them to remit up to 50% of your employment income. In cases where your income is contract income or other income (such as a pension), you may be subject to a 100% garnishment. When CRA gets an enforcement plan in place, they can be that much more difficult to deal with. Note that the only ways to remove a garnishment from CRA are to get CRA to agree to remove (unlikely), go to tax court, or to receive assistance and intervention from a Licensed Insolvency Trustee.

If you have a garnishment in place or are concerned that you’re at risk of having one levied in the near future, and you know you have no ability to pay, then speaking to a Licensed Insolvency Trustee is critical.

A Licensed Insolvency Trustee is the only professional (other than your creditor, a judge or the government) that has the power to stop a wage garnishment in its tracks. Sitting down and discussing the various financial restructuring options available to you is a great place to start when a creditor is garnishing your wages.

Don’t wait. The longer you leave a wage garnishment in place, the more difficult your financial situation will become.

Call Spergel today at 310-4321.


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Financial Restructuring: How to Talk to an Aging Parent about Restructuring Their Finances

A few weeks ago, we covered a trending topic in the news – the growing rate of seniors entering retirement in debt – and this week we thought we’d follow it up by discussing the issue of talking about financial restructuring with aging parents. None of us want our parents to struggle financially, especially in their retirement years, but the conversation can be a difficult one.

As of this year, Canada has more people over the age of 65 than under 15. The age group that now encompasses the baby boomer generation – 50 to 69 – makes up 27% of the Canadian population. That is a vast segment of the population set to retire shortly, or already enjoying retirement.

Talking to aging parents can be tough because, while they used to take care of you, there is often a role reversal at some point in life and you will likely come to take care of them. Talking to a parent about their debt can be humbling. In cases where you have a parent who doesn’t have assets and is in debt, it is a delicate topic to bring up – but one that really should be covered to improve their overall wellbeing.

One thing that you have to think about as far as debt in retirement is that debt can be a burden, so while this may be an uncomfortable topic, your parent is living with payments looming over their head each month. This is especially true for those on smaller fixed incomes.

There is no shame in looking at financial restructuring strategies to help your parent better meet their financial obligations. Instead, doing so often allows for a greater understanding and acceptance of what may be troublesome and an opportunity to fix the things that may be causing them stress.

The route you go depends on your parent’s personal financial situation. For example, if your parent owes more than they can pay back and is having difficulty managing their monthly payments, a good first step is to speak with a Licensed Insolvency Trustee. A Licensed Insolvency Trustee can look at their overall financial picture and make strong recommendations that include solutions to reduce your parent’s debt, interest and payments.

If your parent has investments or equity locked up in assets and owes far less in debt than the available equity, perhaps you need to pursue avenues to unlock that equity and consolidate.

Everyone’s situation is different, and the best solution is one that is based on a careful consideration of all the facts. What you can do is start the conversation. Starting the conversation will help your parents enjoy a better financial situation in retirement. Giving them information about the resources available and helping them to access those resources is a great way to start!

At Spergel, we understand how uncomfortable this conversation can be, but we can help make it easier.

To discuss strategies for financial restructuring, please get in touch with us today: 310-4321.



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Rebuilding Your Credit Score – Myth #1: With Enough Time, Things Will Just Disappear

We often have people call us about rebuilding a credit score that has been damaged by poor credit behaviour. What is surprising is the number of problematic myths that exist in relation to credit scores and rebuilding credit, one of which is the assumption that, after a few years, bad items will just disappear.

One of the biggest mistakes you can make when rebuilding your credit score, thanks in large part to this myth, is leaving bad credit items on the report, unpaid, assuming the item will magically disappear after enough time has passed.

Unfortunately, the reality is far more complicated than that.

In Ontario, credit reporting agencies must follow the Consumer Reporting Act which sets out the various rules and guidelines governing such agencies and their activities, including how long items can be reported to your credit report. While there are some protections under the Consumer Reporting Act, things may not be so clear cut as far as your actual credit report is concerned.

According to the Consumer Reporting Act, there are timelines to which reporting agencies have to adhere, and yes, items will eventually be removed from the credit report after a certain period of time has passed, but the circumstances must satisfy various conditions. Additionally, the reality is that information gets improperly reported to the credit report all the time, especially the longer things go unchanged. Sometimes a creditor assigns a debt to a collection agency and it results in a secondary collection item, etc., an item that remains on the report even after it should be removed.

In most cases that timeline is 7 years. So, if an item is 7 years old, it will be removed from your report – 7 years from when you made your last payment.  Sound good? Sure, if you’re not concerned about what happens with those defaulted items that have balances as you wait for the 7 years to pass. Keep in mind that, if you think 7 years have passed, you must be able to prove the date of the last payment. Is just leaving them there to accrue interest and further damage your credit the answer? All this does is further damage your credit, often to the point that it becomes almost irreparable.

When it comes to rebuilding your credit score, the best thing to do is request a copy of your credit report from both Equifax and TransUnion. Here are the links to both sites:

If you notice things on the report that should have been removed, gather your proof and file a dispute with the credit reporting agency. Once you file your dispute, make sure to follow up to see that an investigation is followed through.

Look at your balances and any defaulted items. How can you clean those up? In order to start rebuilding your credit score you need to fix any problems. Look at your income and debt objectively. What is your true ability to pay? Think some extra help and guidance is needed? Speak with a Licensed Insolvency Trustee to see what your quickest road to recovery is. Sometimes their solutions are the answer, sometimes they will point you in another direction – they are objective and will give you a firm and clear assessment of your finances.

Want to get started on rebuilding your credit score and clearing up those bad debts?

Call Spergel today at 310-4321.



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Many Canadians Seeking Debt Relief as Consumer Debt Levels Reach Record Highs

Back in March, the Toronto Star reported that Canadian consumer debt had reached a new record high in the last quarter of 2016. According to the article, which reviewed a recent Statistics Canada report, “the amount of household credit market debt rose to 167.3 per cent of adjusted household disposable income in the fourth quarter, up from 166.8 per cent in the third quarter.” This means that, on average, Canadians owe $1.67 for every $1 of disposable income.

With this in mind, it should come as no surprise that an increasing number of Canadians are seeking debt relief as a way to deal with their financial woes.

It isn’t even just debt that is causing concern for Canadians. While many may currently be meeting their monthly payment obligations, a recent study done by TransUnion determined that even a 1% increase in interest on mortgages could be seriously problematic for the average Canadian family. According to their study, approximately 27% of 26 million credit-active Canadian consumers are not well-equipped to handle a rate increase even of the smallest amount.

This could be a major concern if the interest rate goes up again, as it did a few weeks ago. Given the way interest rates are tied to long-term bond rates in the U.S. – rates the U.S. Federal Reserve has been saying are about to increase – there is no way to be sure that our rates won’t increase again.

As mentioned, with Canadian consumer debt continually increasing, the number of Canadians looking for viable debt relief options is also increasing. Consumer proposals and personal bankruptcies have proven to be practical options for many, for a variety of reasons, most notably the possibility of reduced overall debt, single monthly payments and halted interest and collection action.

If you’re loaded in debt, there is no time like the present to speak to a financial professional about your options for debt relief. Waiting until things become even worse won’t help – it will only contribute to the problem. If you are drowning in debt, just barely making minimum payments, missing payments, receiving collection calls or threatening letters, you’re badly in need of some help.

If you’re stressed about your current financial situation or what could happen if interest rates increase to 1% or higher and you won’t be able to meet your existing financial obligations, get in touch with Spergel today. We can help walk you through the available debt relief options: 310-4321.


TransUnion, A Deeper Understanding of Payment Shock Dynamics, 2016.


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Does Filing for Personal Bankruptcy Make You the Bad Guy?

For whatever reason, personal bankruptcy has become synonymous with a person avoiding their bills, but that is simply not the case. We believe that the ability to find relief from debt which has become overwhelming should never be considered a bad thing! Some people feel like they are doing something wrong by filing for bankruptcy or that they are the bad guy somehow. This couldn’t be further from the truth.

There are a variety of reasons people choose to declare bankruptcy. Financial issues as a result of divorce, medical problems, job loss, tax issues, or even just credit card debt that has grown out of control are just a few.

The reason bankruptcy exists is to help honest and unfortunate people when their financial situations become unmanageable. It is a legal avenue that you are afforded to get relief if your financial situation has gotten out of control. You are not alone. Tens of thousands of Canadians, from all income groups, take advantage of its benefits every year.

How does the process of personal bankruptcy work?

The first step is to meet with a Licensed Insolvency Trustee (LIT) who will review your finances and determine if bankruptcy is the right solution. If it is, the LIT will perform a calculation of your income, certain expenses, and assets to determine your repayment term in bankruptcy and the subsequent monthly payment. When you file, the LIT will send a copy of your bankruptcy filing to all of your creditors. They then have to file a claim with respect to their debt to have it included in the bankruptcy.

After you file for bankruptcy you will have to file monthly income statements with your LIT and attend mandatory credit counselling sessions. Once you have satisfied all of the terms of your bankruptcy, you will be discharged from bankruptcy.

Personal bankruptcy offers several significant benefits:

    • It gives you a chance to wipe the slate clean
    • Reduces debt
    • Stops interest from accruing
    • Reduces monthly payments and allows for a single monthly payment
    • Stops most collection action including garnishments and frozen bank accounts, even those issued by the Canada Revenue Agency

If the stigma attached to personal bankruptcy is all that’s stopping you from taking advantage, stop worrying and start living again. Spergel can help. Our Licensed Insolvency Trustees are here to help you develop a strategy for financial wellbeing.

Call us today at 310-4321.


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Clearing Up Problematic Credit Card Debt

Most of us have them. Credit cards can be so convenient and often make life easier when it comes to doing anything from making hotel reservations to ordering things online. However, as credit card debt increases overtime, the risk to your cash flow and overall finances becomes a major downside of that convenience.

When you can’t pay your total balance at the end of the month, this is the slippery slope that may sound all too familiar:

  1. You get a credit card at 14% interest (1.16 monthly as it compounds monthly).
  2. You use it to finance a big-ticket purchase that you don’t have the cash to pay for outright. For the sake of an example, let’s say that purchase is $3,000.00, so now your balance is $3,000.00.
  3. When your bill comes in, your minimum monthly payment due is only $60.00 (based on 2% of the balance) and the interest on the card was $34.30. That may not seem so bad, and it means you don’t have to pay it all at once, so you pay the minimum and forget all about it until next month.

For many, this is common, and what sounded promising with one card, becomes problematic when many cards, and higher credit card debt limits, are introduced. The reality is, to get this card paid off quickly, you will need to pay far more than your minimum monthly payment. If you can’t, and are finding even those payments difficult to stomach, it may be time to think about how you can remedy the issue.

This is where taking a good hard look at your finances comes in. Do you have the money to just pay off your credit card debt? Do you have any home equity you can leverage to get out of debt? If you have answered no to both questions, then you may want to consider some other solutions, such as a consumer proposal.

In a consumer proposal:

  • A Licensed Insolvency Trustee (LIT) reviews your income, assets, and debts;
  • Based on a financial calculation that the LIT performs, a proposal amount will be formulated;
  • Your repayment of this amount will be divided over monthly installments over a term of not more than 5 years;
  • If accepted by the majority of your creditors, you will begin making the consumer proposal payments;
  • The proposal can be paid in full at any time; and
  • The proposal is removed from your credit report 3 years from the date it is paid in full.

Proposal benefits include:

  • It often reduces the overall amount of debt you owe;
  • Allows for a single payment that is usually less than past payments to credit cards;
  • Stops interest; and
  • Stops most collection action such as wage garnishments and frozen bank accounts.

A consumer proposal represents a very valuable relief option when credit card debt becomes unmanageable. If these debts are keeping you up at night, Spergel can help.

Call to schedule a free consultation today: toll free 310-4321.


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CRA Collections Breathing Down Your Neck? Talk to a Licensed Insolvency Trustee

Both the personal and business tax deadlines have now passed, and that means that most people have either received their refund or an assessment indicating tax debt is owing. If you’re in the latter category, and are struggling to come up with the funds to pay the Canada Revenue Agency (CRA), you may be best served by speaking with a Licensed Insolvency Trustee (LIT).

Why? When you owe a tax debt, CRA collections can be relentless. When your file gets assigned to an agent, that agent will use their best efforts to collect. This will likely include calling you and/or sending you letters demanding repayment.

In most cases, there are 4 different stages to CRA collections:

  • Step 1 – CRA collections will demand payment. If you pay, great – all further action stops. If not, move on to step 2.
  • Step 2 – If you fail to pay, the agent assigned to your case will begin contacting you to try and find out as much as they can about you.
  • Step 3 – Once you have engaged in a dialogue, the agent may try to negotiate with you if you provide further information. They may offer to consider a payment plan. They will provide you with a financial disclosure form asking you to disclose where you live, work, bank, monthly income and expenses, debts, and assets.
  • Step 4 – If you can’t make a payment arrangement that they will accept, or are forced into one you cannot afford, thus missing payments, the last step is for the CRA collections department to take action. Remember that financial disclosure form? It now proves very handy for that agent:
      • Your banking information will be used to freeze your account
      • Your employment information will be used to garnish your wages
      • Your housing information will be used to place a lien on your home

The best thing to do if you have a tax debt that you know you can’t pay is get professional advice as soon as possible. A Licensed Insolvency Trustee can go through your finances and help you determine the best financial plan for your situation. When some people think of a Licensed Insolvency Trustee they think of bankruptcy, but bankruptcy isn’t the only solution that they can bring forward and often bankruptcy doesn’t end up being the right solution. Your plan must consider your current situation and future financial goals.

Act fast, because depending on what enforcement action CRA deploys, not doing so may lessen your negotiating power in the future.

Want to deal with CRA collections before things get worse? Spergel can help.

Schedule a free consultation today by calling toll free 310-4321.


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Rising Home Values Leaving Canadians House Rich but Cash Poor

If you’re a homeowner in the GTA, you are no doubt aware of the fact that home values have skyrocketed over the last few years.  In March 2017 alone we saw a 33.2% increase in the average selling price when compared to the previous year, jumping from $688,011 to $916,567.

For those selling, this has meant great gains, and while some homeowners are ecstatic about the new equity these increases represent, some are left feeling somewhat house rich and cash poor, both for those with home in the area and those just getting into the Toronto market.

While homeowners are accumulating great equity in the GTA, many are also accumulating debt. In fact, research shows that Canadian families are currently carrying record debt loads – to the tune of an average ratio of debt to net household income of 167.3%. This has led many to consider their options and how they can use what they already have – homes with equity – to consolidate debt.

However, while that was an easy solution in the past, amidst this booming housing market the federal government has been systematically changing rules regarding insuring mortgages in an effort to protect the economy. One of these changes was to no longer insure refinance products.

As a result, the options for many homeowners who had plans to refinance to consolidate debt have greatly reduced. Since many lenders will now only lend up to 80% of a home’s value, the extra equity doesn’t free up sufficient liquid cash to deal with debt.

For those individuals sitting with more than 20% equity, things may seem rosy. However, for those looking to consolidate debt but unable to meet the 20% threshold, the situation is very different.

Fortunately, even with these new restrictions, there are different ways to deal with debt when you can’t refinance:

  1. Pursue an unsecured consolidation loan – this means new credit and interest and you must have good credit.
  2. Sell your home and use the equity to pay debt – most people don’t want to pursue this route, and we can obviously understand why!
  3. A consumer proposal that considers both your income and equity in assets – this can often reduce overall debt, lead to a single monthly payment, freeze interest and stop collection action being taken by creditors. In this scenario, an overall assessment of your finances is completed by a Licensed Insolvency Trustee to see if a consumer proposal is the right solution.

At Spergel, we can help you best understand and explore the options that meet your current needs. We have the experience that translates to real results, no matter the current housing market. Want to talk to someone about dealing with debt that has become overwhelming?

We’re here to help: toll-free at 310-4321.



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Debt Advice: Canadian Seniors Retiring with High Levels of Debt

No matter a person’s age, debt can be a stressful financial burden to deal with. Once that debt becomes unmanageable, it is even more overwhelming. However, when one is working, or has the ability to take on work to increase monthly income, things may seem a bit easier compared to someone who has retired and is relying on RRSPs and pensions to get by, and often a little debt advice goes a long way. For retiring seniors, debt is often a more pressing and troublesome issue.

According to a recent Globe and Mail article which references Statistics Canada numbers, “the total amount of debt held in households led by people aged 55 to 64 almost quadrupled between 1999 and 2012, while the level for the overall population did little more than double (these are inflation-adjusted numbers). One third of households led by people aged 55 to 64 still had a mortgage and 38 per cent had credit-card or instalment debt (basically a payment plan for purchasing an item).” That amounts to significant debt carried into retirement!

When you factor in how low old age pensions are in Canada, a significant debt load can really hinder an individual’s ability to meet their monthly financial obligations.

According to the Government of Canada, these are the payment amounts/month for Old Age Security Pension (OSA):

  • single, widowed or divorced pensioner = $864.09
  • If spouse/common-law partner receives the full OAS pension = $520.17
  • If spouse/common-law partner does not receive an OAS pension = $864.09
  • If spouse/common-law partner receives the Allowance =$520.17

Retirement should not come with stress. After working so hard, for so many years, retirement should be a time for relaxing. The last thing we want is for our senior parents and grandparents to struggle with financial pressure as they age.

While some may argue that, as we age, credit takes on a different level of importance, and overall quality of life should be most important, it is essential to note that different types of debt can dictate more severe consequences. For example, while credit card debt may not make falling asleep at night difficult, tax debt is serious and CRA can garnish up to 100% of pension income, leaving a person with very little (if anything at all) to live on.

Financial options vary depending on a person’s financial situation – many things have to be considered, including assets, debt, types of debt, future plans, and the overall quality of life a person expects. It is important to sit down with a financial professional and work through everything.

This is something Spergel is sensitive to and we treat your parents like our own. This isn’t a one-size-fits-all scenario – everyone’s situation is different. We will look at all the variables and craft a plan that leaves your senior family member with reasonable monthly payments and protects them against action from creditors.

Call us today for a free consultation and real debt advice you can depend on: toll-free at 310-4321.



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