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How to Settle a Tax Debt with the CRA

Of all the different types of personal debt that Canadians deal with, owing taxes to the Canada Revenue Agency (CRA) seems to cause the greatest concern. While the government is, for the most part, treated as another creditor in consumer debt solutions, such as a consumer proposal or personal bankruptcy, CRA does have additional collection powers, granted to it under our tax laws.

As licensed insolvency trustees, one of the first things we advise a debtor is not to fall behind in filing your tax returns.  Whether you can pay131 what you owe or not, you should file your return before the deadline to avoid additional filing penalties.

What Can CRA Do?

Often, CRA will collect tax money owed by garnishing your pay cheque or by putting a freeze on your bank account. While other creditors can also garnish your wages, CRA unlike others, does not require a court order to do so.

If you are self-employed, CRA has to the option to send a notice to the company or companies that contract your services, and garnish your contract payments at source.

Credit Counselling Tips

CRA has the statutory right to register a lien on your house. They will also continue to charge penalties and interest until the debt is paid back in full. It is important to note that once CRA registers a lien on your home, this lien cannot be discharged by filing a consumer proposal or bankruptcy. If you find yourself in a position where you think that CRA may register a lien on your property, it is a good idea to seek out a Licensed Insolvency Trustee such as Spergel to get advice.

Can I Negotiate My Tax Debt with the Government?

Generally, it is not advisable to negotiate directly with CRA to try to reduce your debt size. Agents at CRA do not have the authority to accept a reduced amount. There is a Taxpayer Relief program that allows for the reduction of penalties and interest in some cases, including natural disasters, deaths, health problems, financial hardships and mistakes made by the CRA.

However, applying for Tax Relief is a formal process that usually requires professional help to complete properly.

Try to Renegotiate Your Repayment Terms

With tax debt, if you try to renegotiate your repayment terms directly with CRA by proving how much can afford to pay on a monthly basis. You will likely receive a questionnaire asking you to account for your monthly expenses.

Repay Tax Debt

Your debt will have to be paid in full, and whether or not you get relief from penalties and interest is up to CRA.

Seek Legal Protection from Tax Debt Collection

If you cannot pay your tax debt, then you would be wise to seek out the counsel of a Licensed Insolvency Trustee, such as Spergel, to protect your wages and assets through filing either a consumer proposal or personal bankruptcy.

A consumer proposal may allow you to settle your debt for less that the full amount owed. In a consumer proposal, all creditors, including the government, are presented the same proposal offer – usually a better recovery than they would receive through the bankruptcy process.

With a consumer proposal, your creditors have 45 days to vote on the proposal offer presented. If need be, your Licensed Insolvency Trustee can present counter offers to your creditors on your behalf to have the proposal accepted. If creditors representing more than half the value your debt accept the proposal, they all are bound by it, including CRA.

If CRA is your single largest creditor and has the controlling vote in such a negotiation, you may have to meet with them to work out the proposal terms. They will require that all your outstanding tax returns are filed, that you have sufficient income to make your payments and that you make installments on your current taxes, so you do not fall further behind in the next year.

Filing for Bankruptcy to Cope with Tax Debt

If you are unable to negotiate a tax debt settlement or consumer proposal, filing for bankruptcy is the last option to eliminate your tax debt. Income tax and HST/GST debts are covered in a bankruptcy and eliminated upon discharge.

If you owe CRA more than $200,000 for personal income tax debt and that amount represents 75% or more of your unsecured debts, then you are not eligible for an automatic discharge from bankruptcy. You will have to attend a discharge hearing in court during which your discharge may be made conditional on certain duties.

Dealing with tax debt is a complicated matter and requires the expertise of an experienced Licensed Insolvency Trustee to best advise you on your options.

Contact us today, at Spergel, for a free consultation, so we can review your particular circumstances and set you on the road to true tax relief.

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Don’t Rely on a Tax Refund to Pay Holiday Debt

With the holidays done, many of us face the sobering reality of how much we spent over the holidays on our January bills.

To avoid a spiraling debt cycle, we need to find a way to pay off our bills. We know that with tax season around the corner, we may receive a refund. Why not use this to pay off our holiday debt?

The Gap Can Be Expensive

Of course, it is always a good idea to take a sudden infusion of cash to pay off debt. Many people view a tax refund as a cash windfall and use it to go on vacation or for some other personal indulgence.

Budgeting

Depending on how much you owe and how much you are getting back as a refund, it may make sense to have the financial discipline to use the tax refund to reduce your debt load.

However, unless you have done your taxes early, there will be a gap between when your holiday bills arrive and when your tax refund shows up. That gap can be expensive.

High-Interest Rates and Unwelcome Surprises

Be wary of debt accumulating due to the high-interest rates on credit cards as you wait for your tax refund.

You should also prepare for a scenario in which your tax refund is less than you anticipated or if you do not end up getting one at all.

If this scenario occurs, you are then faced with your original holiday debt load, plus interest and penalty charges, without any additional means to repay it.

Do Not Rely on Your Tax Refund to Repay Holiday Debt

In anticipating a tax refund, some people might consider using other types of credit to pay off their debts. They might take out a loan, use a line of credit, or shift the balance to a lower-rate credit card. However, these strategies do not take care of the debt; they merely shift it around.

Time to Tighten Your Belt

After the holidays, many people address its physical excesses by being more active and eating a more balanced diet. When it comes to holiday debt, it also is a good idea to tighten the belt and exercise good sense by cutting back on entertainment, dining, and other unnecessary expenses, until your financial affairs are in order.

Manage Debt

Part of belt-tightening is creating a budget and following it. A budget should cover both small expenses, like your morning latte, as well as big-ticket items, such as shopping around for cheaper car insurance or deciding whether this really is the year to take a cruise vacation.

Start Chipping Away at Holiday Debt Immediately

You should start paying off your holiday debt immediately.  One payment strategy is looking at the debt with the highest interest rates (usually one of your credit cards) and taking care of it first.

Another strategy, called the “snowball method,” appeals to human nature, and has you pay off the smaller, easier debts first, giving you a sense of accomplishment that leads to you wanting to further repay your debt.

Talk to an Expert

Sometimes, despite all our best intentions and hard work, our debt can get away from us and put us in financial hot water. At this point, you should talk to an expert to discuss your options in dealing with your debt load.

At Spergel, you can have a first consultation, free of charge with no further obligations, with one of our experienced licensed insolvency trustees – a valuable first step on the path to financial peace of mind.

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Credit Counselling Tips to Start Your Year Right

With the start of the New Year, make 2017 the year that you get your finances on track. Here are some credit counselling tips to help you start your new year off right:

Make a Budget and Stick to It

Repaying your current debts as well as balancing future debt is all about budgeting your expenses. Create a monthly budget that includes all of your recurring, semi-annual, and yearly expenses, as well as an amount for debt repayment.

Try to factor in and account for extras and emergencies that you may not always think of by totaling the amounts needed for these items and saving a small amount a month in a reserve fund. Getting a handle on your actual monthly expenses will help you get a more realistic picture of your financial situation.Set a BudgetBy creating a monthly calendar you can make sure that you don’t overspend money that you’ll need for non-monthly or out of the ordinary payments later. If you can stick to your budget month by month, you’ll slowly see your debt disappear.

Once you’ve dealt with your existing debt and have built a reserve fund for emergencies, you can begin saving. The most important thing to remember about saving is to create realistic, achievable, and productive goals so that you motivate yourself to save.

Remember That Small Purchases Add Up

It’s important to remember that you need to budget and limit small and impulse purchases. It may not seem like a big deal to get a coffee a day, but that adds up fast; a coffee a day will cost you $60 -$80 a month.

Remember, you can buy a tub of coffee for about $10 that will last you a few months. These little purchases seem small each time you make them and give you the illusion that they aren’t hurting your finances. However, when you add them up, these can be a big reason why you’re overspending and having problems managing your budget.

Pay Down Debt Efficiently

Although there are various strategies to paying down your debts, you will pay the least amount of interest if you pay your debts with the highest interest rates first.

Ultimately, the longer you are paying the high-interest debts, the more interest you will pay.

However, paying down your lowest interest debts first, especially if they are small balances, can give you a sense of accomplishment and provide motivation to continue working towards eliminating the remainder of your debts.

Choose the strategy that you feel would best motivate you to stick with your budget, and if it’s not working, try another strategy until you find one that works.

Use Credit Sparingly

If you already have significant debts, the first thing to do is make sure you aren’t creating more debt. Be cautious when using credit and make sure that you use your credit cards only when necessary.

When possible, try to take out the cash necessary to buy the day’s items that have been budgeted for, which should curb the urge and ability to purchase items outside the budget.Credit ManagementEven if you have to go back to purchase an item the next day with cash, having 24 hours to think the purchase through allows for an important cooling off period to determine if the item is essential. It’s also best only to use credit cards when you have the money to pay them back immediately. This will ensure you never go farther into debt.

Pay More Than Your Minimum Balance

Paying only your minimum balance usually doesn’t even cover the interest being accrued, and therefore you are probably still increasing your debt.

The best way to pay down your debt quickly is to pay more than the minimum balance necessary on your credit cards. Even if you can’t add a lot, paying an additional amount above the minimum due each time will help you reduce your debt faster and slowly eliminate it.

Spend Less Than You Plan to Spend

Challenge yourself to spend less than your budget allows for, and reward yourself by putting half the extra money into savings and the other half to further pay off current debts. Hopefully, the reward of both saving and reducing your debt will motivate you to further reduce your monthly budget.

If your grocery bills are around $80 a week and you’re able to cut it down to $70 by using coupons, taking advantage of sales, and price comparing, that extra $40 a month can further reduce your debts.

Any time you save some extra cash from your budget, don’t consider it extra money, instead, put it towards your debt and help yourself climb out of it. This way, instead of enjoying a treat now and continuing on in debt, you’ll end up reducing your debt and then can spend any extra money on yourself without any guilt!

Pay Using Cash

A number of studies have shown that paying with cash will help reduce your tendency to spend and can even reduce the actual amount that you spend.

People are more likely to spend more money when they are using credit instead of cash, so sticking to cash may help you cut down your costs and manage your spending without you really realizing it. This can be a great way to subconsciously reduce your debt and help get out of it.Many plans offer points that you can collect, which encourage you to spend on credit cards. This has been proven to increase your spending on a credit card whereas if you were to make purchases using cash you would spend less.

Therefore, cutting back on using credit and using cash can be a great way to help you fight rising debts and eliminate them altogether.

Speak With a Licensed Insolvency Trustee

If you’d like professional, tailored, and personalized credit counselling advice, consultation, and services, your team at Spergel is here to help.

If for any reason you think you could benefit from speaking with us about your options regarding your debts, please contact us at Spergel. Our team of experienced, dedicated, and reliable personnel will provide you the best advice and support necessary to help you with your debt.

On top of this, we’ll give you the knowledge and tools to help deal with your debt problem and work towards eliminating it.

How to Effectively Manage Your Credit in 2017

If you follow these simple principles to debt management, you should start to see an improvement in your spending and a reduction of your debts.

These tactics are some of the best ways to reduce and manage your debts so that you can get your finances under control and work towards financial success in the new year.

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3 Ways to Stop Wage Garnishment Now in Ontario

What is a Wage Garnishment?

A wage garnishment is a legal proceeding in which a creditor can legally deduct payments off your wages to pay back taxes, child support, or other debts.

According to the Ontario Wages Act, the most that can be garnished from your wages is 50%.

Who Can File a Wage Garnishment and How Does It Work?

A wage garnishment can be obtained by any creditor that has unpaid debts owing to them, including collection agencies, Canada Revenue Agency, the Court, credit card companies, payday loan lenders, or any other potential creditors.

Generally, the creditor must bring a motion to court to obtain a judgment and a Garnishment Order. However, certain creditors such as CRA do not need such an order.

In Ontario, there are 3 different ways to stop wage garnishments aside from repaying the loan itself.

1. Make a Deal Directly with Your Creditors

If at all possible, making a direct deal with your creditors for repayment is the best option. This can potentially help stay the other courses of action by the creditor and give you a chance to renegotiate a reasonable repayment structure for you and your creditor.

You should remember that if your creditor is already seeking wage garnishment, they could be looking for a repayment schedule that pays off the entire debt owing plus interest.

2. Consumer Proposal

A consumer proposal may be a better option as it allows you to compromise your debts and is a proactive solution. A consumer proposal allows you to offer a percentage of your debts as settlement of your balance owing with your creditors and is usually for an amount less than is owing.

Another benefit of a consumer proposal is that it allows you to customize the terms and payments based on your situation. It is more advantageous than filing bankruptcy because it does not have the same long-term repercussions, such as a shorter path to credit rebuilding and it allows you to keep your assets.

Consumer proposals typically work on a monthly payment structure that cannot exceed a 5-year commitment. After you’ve made your final payment, your debts will have been eliminated.

3. Declare Bankruptcy

Along with giving you a fresh financial start, declaring bankruptcy will stop wage garnishment orders against you.

It is important to know that bankruptcy cannot eliminate all debts, such as student loans, support payments, and court fines, among others.

While you may stand to benefit from declaring bankruptcy, you should be sure to weigh the pros and cons first, such as how it will affect your credit score and which assets you stand to lose.

Bankruptcy is usually the last resort for debtors who have exhausted all other options available to them.

Discussing your options with a Licensed Insolvency Trustee can help you determine which option is best suited to your situation.

Wage Garnishment Options Summary

If you are being subjected to wage garnishment, your first course of action would be to try to reach an agreement directly with your creditor. In most cases, once a wage garnishment has started, negotiating with them may not yield results.

The next best option is to proceed with filing a consumer proposal, which will allow for renegotiation of your debt repayment. This can help you reduce your total debt owing and leave you with one manageable payment a month on behalf of all creditors, making it easier to manage paying down your debt.

Finally, you can file a personal bankruptcy, which will automatically stop any wage garnishment against you.

If you are under pressure regarding a wage garnishment, please contact us at Spergel for stopping wage garnishment now or for advice and support.

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Top 10 Ways to Reduce Your Debt in 2017

Our Tips to Reduce Debt in the New Year

If one of your New Year’s resolutions is dealing with your debt, here are a few strategies to start minimizing your debt for the current year:

1. Organize Debt by Interest Rates

One of the most important aspects of managing and reducing debt is to understand where you stand financially. The best way to make sure you do this is to make a list of all your bills so that you can clearly review all of your expenses. From here, order them according to their interest rate, highest to lowest.

2. Paying Up

Once you’ve organized your debt there are two ways to potentially pay it off, the first of which will cost you longer over the long run but will potentially motivate you to pay your debt down faster.

Calculator

This method involves paying off the debt with the lowest balance first and working your way down the list to the largest debt. By paying off the smallest debt first, you may be motivated to continue paying off your debts and feel a sense of accomplishment as each debt is erased.

3. Laddering

The problem with paying bills which have the smallest balance first is that you may end up paying more interest over the long run if the smallest debts have the lowest interest rates, as opposed to paying off the high-interest bills first.

Paying the higher interest bills first allows you to reduce the interest you will be paying on your total debt.  Paying these higher interest debts first will ultimately help you get out of debt faster. This means you will pay less total interest on your debt over time.

4. Never Miss Minimum Payments

While you do want to pay off bills that are charging you higher interest rates, you also want to make sure you are not adding to your debt load by incurring additional interest and extra fees.

Mastercard

Before paying off principal from high-interest rate debts, make sure you pay all of your minimum payments on all debts to avoid additional interest and penalties. Once you have made your minimum payments, you can then allocate any extra monthly savings to pay off the bills with the highest interest in order to reduce your total interest and debt.

5. Create a Realistic and Strict Budget

Making sure you reduce your debt will take planning and sacrifice. In order to make sure you can manage and reduce your debt heading into 2017, you should plan and establish a monthly budget that includes all monthly expenses as well as spending money, debt reduction payments, and savings for quarterly or annual bills.

Make sure you identify and reduce unnecessary expenditures. Reviewing your last three bank statements or credit card statements can give you a clear picture of your monthly finances.

Budgeting

This will make sure that you are prepared to pay for all expenses and that you are not caught off-guard by unexpected bills. The key is to set a basic budget and live within it.

This doesn’t mean you can’t enjoy yourself; it just means you have to plan for it. Provide for a certain amount for miscellaneous spending each month that can be used for entertainment, however, stick to the allocated amount.  

This may involve planning extracurricular activities with a lower cost, such as parks, exhibits, and potlucks. This will ensure you are not spending money that would otherwise further reduce your debt load and allow you to put more away to save or pay off current debts.

6. Establish an Emergency Savings Fund

Once you establish a clear monthly budget and are able to live within it, establishing an emergency safety fund is a great way to avoid incurring additional debt. Although this can be difficult, your monthly budget will help you get started.

An emergency is usually considered to be an out of the ordinary expense that cannot be put off, such as a medical expense or a car repair. However, this time you’ll be prepared when it happens and you won’t go further into debt to make the payment.

A fund of $1000 is a realistic goal that can go a long way in the event of an emergency expense.

7. Contribute Extra Money

If at any time you earn extra income, such as a bonus, or come into some money, such as an inheritance, it is always a good idea to put it towards paying off your debt.

Although it may be tempting to spend it on a treat, such as a trip, a new tv, or a new outfit, in the long run eliminating your debt will give you the peace of mind that no consumer good can give you.

8. Manage Your Lifestyle

It may seem simplistic, but if you are having trouble with debt – stop spending! Ultimately, one of the best ways to combat and reduce your debt is to make sure that you are not taking on more.

Lifestyle on Budget

More than that, you should be consciously working to pay it down. A simple and effective way to do this is to downsize from what you are currently spending on non-essential expenses.  There are many alternatives to expensive entertainment that can be just as rewarding.

9. Increase Income

Increasing your income is another, although more challenging  way, to reduce debt. Hobbies can be turned into a small side business, or part-time work can assist in increasing your income until your debt load is paid off.

10. Reward Your Successes

Paying down debt is a challenging process, but the mental and emotional freedom from the stress of your debts is well worth the hard work to eliminate your debts.

Motivating yourself by rewarding yourself when you do pay off debt is a great way to ensure you stay on track and progressively work towards reducing your debts.

How We Can Help

The professionals at Spergel can help you get started in ensuring that 2017 is the year that you deal with your debt. Speak to one of our debt professionals who will listen to your particular situation and give you custom advice as to the options available to you.

Give us a call for a free no obligation consultation today at our toll-free number 310-4321.

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How to Create a Holiday Budget while Paying Back Lenders

Creating a Holiday Budget that Works

The holidays are already a stressful time without having to worry about finances. Studies have shown that the average family will spend more than $800 on gifts this holiday season. It also shows that 37% of people will use their credit cards to pay for their holiday shopping. So how do you avoid that, while still celebrating, and paying back your debts?

1. Set a Holiday Budget

Saving for the holidays is always a good idea. Before you can start your shopping, you’ll need to create a budget to find out how much you’ll need. Just keep in mind that the holidays aren’t all gifts, it’s also food, parties, decorations and outings with family and friends.

Christmas Present

If you build a budget ahead of time, you’ll be less likely to find yourself in a hole. In this situation, you also have to remember to keep up with your lender’s payments. Call and see if you can set up a payment schedule for the holidays. Usually, they’ll understand or at least work with you so that way you both win.

2. Create A Holiday Account

To start a holiday account, you must first have your budget set. Start by adding up everything you expect to spend based on that budget and count the number of weeks you have to shop.Presents

Try splitting your budget amount into easy weekly, or even in some cases bi-weekly, deposits and start saving. You can take a chunk out of each paycheque and add it into the holiday account until you’ve accomplished your budget goal. The earlier you start, the easier and less stressful this will be.

3. Set Up Meetings

There are some banks which will allow you to postpone your payments until after the holidays. Now this sounds like a very enticing deal, but you need to make an appointment and sit down with someone at the bank. Usually, with installment loans, your creditor will just add the payment to the end of the loan period, but you’ll still have the pay the interest.

Ornaments

If you have a history of making reliable payments, meaning they’ve been on time and consistent, then they may allow you to skip this one. But, if you have a tendency to forget your payments then your request may be denied. If they feel as though you’re a possible risk, they won’t take the chance.

Enjoy Your Holidays While Saving

When it comes to the holidays, you shouldn’t let the fact that you owe money discourage you from celebrating with your family. There are many different ways to make sure you don’t overspend but still treat your family, friends and yourself. The holidays are a time for peace and spending time with the people you love. Don’t let the worry of payments ruin that.

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Top 5 Ways to Travel During the Holidays on a Budget

How to Save Money While Traveling During the Holidays

When making travel plans for the holiday season, there are a number of things you can do to save money. Here is how to manage your travel budget while enjoying the holiday season.

1) Look for DealsTrip Advisor Logo

When looking for travel, you should consider bargains that are available online. Many travel-booking organizations – both airlines and hotels – want to fill empty spaces. Hotels will often fill rooms that have not been booked at reduced rates to ensure they fill these spaces.

Using price comparison websites is an excellent way to find deals. Sites like TripAdvisor, Trivago, and Kayak all offer price comparisons as well as travel reviews, which are ideal for both helping you choose your destination and booking at an ideal time of the season.

These sites can help you with all aspects of your trip, including travel insurance, car rentals, and package deals for the holidays. It is important to note that these prices often list the most basic services in order to be able to list the lowest possible price.

2) Travel at Cheaper TimesTravel During Off Season

Depending on the time of year, prices will vary. By choosing a travel time that is less busy, you should be able to save on your flights and stay, getting an entire package at a lower rate.

If you aim to travel just before or after the peak times, you can still have a great experience and save on travel. In many cases, traveling at less popular times will also ensure that your trip is less busy and you will have fewer people to compete with for ideal tourist locations.

The time a flight departs can have a big impact on the price. Choosing to depart on an earlier or later flight can potentially save you a lot of money and will only cost you a small amount of time.

While it is important to be flexible and search for bargains, you can also benefit from booking early and preparing ahead. Generally, booking months in advance will give you a better deal, unless you wait until last minute.

The problem with booking last minute is that you have no guarantee on your accommodations or plans. However, if you are less concerned with a specific location and would rather save, last minute booking can be a great way of saving money on travel.

Ultimately, when booking for the holiday season, you will want to balance waiting for the last minute and booking early depending on how set you are on a specific destination.

3) Flight FlexibilityCheaper Flight Times

Although you have a vision of what you want out of your holiday travel plans, you can save money by being flexible on your travel plans. First off, being comfortable with an indirect flight will save you a lot of money.

If you are willing to transfer flights and spend a little more time in transport, you can save a bundle on your travel expenses during the holiday season. Although less convenient than a direct flight, these can save you a lot of money.

Consider flying the day of the holiday as well. Most people do not want to travel on the day of holidays, so the rates are significantly lower than the times around the holidays. Although you may not want to travel on the day, it can save you money on your travel expenses.

4) TransportationWalking Around Travel

When traveling, you can save on various transportation costs if you plan wisely and are willing to take time and use your legs. Walking around is always a great option. It saves you lots of money on transportation costs and allows you to see up close the area you are traveling through. 

If you plan your route in advance, you can probably see most of the sights you would like to without spending too much extra time traveling. Best of all, it costs nothing!

You should also consider getting a travel pass for the day or the week. Often, you can get a public transport pass that will last you the day and give you unlimited trips.

These passes can help keep costs down and provide easy access to transportation while traveling. Sometimes, these come with city sightseeing passes that include vouchers for various locations.

Sightseeing passes will also give you a bundle deal or discount on other services throughout the area. These can let you travel more efficiently and see more sights at a cheaper rate.

5) Plan Meals Ahead of TimeMeal Planning

Eating out while traveling is one of the ways we fail to properly budget. It is convenient and simple to buy meals out when you need them, either at restaurants or by getting fast food.

This is a quick way to rack up your travel bill and turn a reasonably priced vacation into an expensive one. Instead of buying food as you want it at convenient locations that are more expensive, consider planning meals for the week.

Depending on where you’re staying, you may even be able to purchase groceries and cook your own meals throughout the week.

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How to Talk to Collection Agencies

How To Talk to Collection Agencies

Receiving a phone call from a collection agency can be stressful. The agents are sometimes forceful, blunt, and difficult to negotiate with. It’s easy to become flustered or nervous when dealing with debt collectors.

However, it’s important to know how to talk to collection agencies properly. Asking the right questions can help you verify information, give you clarity, and make the debt resolution process easier in the future. Even though it can seem difficult, it’s necessary to get certain information when you receive a phone call from a collection agency.

Questions to Ask a Collection Agency

  1. Find out who is calling
  2. When you have an outstanding debt, the creditor themselves will usually contact you for the first 6 months. After that, they can send the outstanding debt to a collection agency. When you receive a call, always verify whether it’s the creditor or a debt collection agency contacting you. This way, you know who to contact and how to properly negotiate to pay your debts.

  3. Get details of the debt
  4. You should always ask for as many details about the debt as possible. Find out the alleged amount owing, who it is owed to, and when the debt was incurred. These details should be mailed to you before a collection agency calls you, but it’s a good verification step to ask for them again and make your own notes.
    If the debt doesn’t seem familiar, you can verify it directly with the creditor or obtain a free copy of your credit report from TransUnion or Equifax. If the debt isn’t yours, make sure to notify the creditor directly so the collection agency can contact the correct person.

  5. Get the agent’s details
  6. When dealing with a collection agency over multiple phone calls, it is best to always speak with the same agent. Always ask for the agent’s name, telephone number, and company name to ensure you only have contact with this person. The less agents involved, the easier it will be for you to keep track of any negotiations and payments.

  7. Ask for a written receipt for any payments
  8. If you are able to pay the collection agency or negotiate a payment plan with them, always ask for written confirmation and a written receipt. Verbal agreements are difficult to prove, so this written acknowledgement of any deal is necessary.
    When making a payment, never pay with cash (as this is nearly impossible to track) and always ensure you receive a receipt.

  9. Verify all the information
  10. If you’re concerned about the legitimacy of the collection agency, you can verify their information a few different ways. You can make sure they are legally registered in Ontario by asking for their Ontario registration number or directly contact the original creditor to ensure they work with this collection agency. If they aren’t legitimate or legally registered, you don’t have to deal with them.

Want to Stop Collection Calls?

If you’re receiving calls from debt collectors and want to stop collection calls, the best way to do this is to pay off your debt. A Licensed Insolvency Trustee can help with a variety of debt solutions to help get the collection agencies off your back and alleviate your debt.

If you want to stop the collection calls, Spergel can help. We know how to talk to collection agencies and can do so on your behalf. We will find the debt solution that is right for you.

Visit our Collection Agency Solutions for more information!

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Bankruptcy for Small Business Owners and Self-Employed Individuals

Bankruptcy for Small Business Owners and the Self-Employed

The decision to declare personal bankruptcy is a always a difficult one to make. For those who are self-employed or own a small business the decision becomes more complicated. How will your business assets be affected? What will happen to your business?

There is much to be considered as a business owner or self-employed individual in making the decision to declare personal bankruptcy. Spergel can help you explore your options and navigate the legal issues surrounding the decision.

Self-Employed Bankruptcy: Unique Issues

If your small business is conducted through a private corporation and you are a director, you must resign the directorship. If the business is viable it can perhaps continue without your involvement but such is the exception not the rule. Usually when the director of a small corporation resigns, the business ceases to operate and its assets are dealt with by the creditors of the corporation. In addition to personal liabilities being covered by your personal bankruptcy, so too will your liabilities as a director such as unpaid HST, employee source deductions, claims by employees and creditor claims that you have guaranteed personally.

If you are self-employed or operate your business as a sole proprietorship, the assets and liabilities of the business are yours as an individual. Subject to provincial “tool-of-trade” and personal exemptions, all the business assets and your personal assets will form part of your bankruptcy and almost all liabilities whether business or personal will be covered by your bankruptcy.

In either of the above situations, you can continue to earn a living subject to the surplus income guidelines imposed by bankruptcy law which guidelines allow you to retain a certain proportion of earnings depending upon your after-tax income and the number of persons in your household.

If you make the decision to earn a living after bankruptcy as a self-employed individual rather than as an employee, you must understand that obtaining credit should you need such to operate will be virtually impossible. For those businesses that have irregular income this can become a real challenge and may very well lead to further financial failure.

Other Debt Management Options for Small Business Owners and the Self-Employed

In light of the impact on small business owners and self-employed individuals, bankruptcy isn’t always the best option. Spergel also offers consumer proposals as an alternative to bankruptcy depending upon your personal situation. Consumer Proposals are an offer to your creditors to repay a portion of your debt over a maximum of five years. This alternative, if accepted by your creditors stops all interest charges and legal process brought against you and allows you to focus on the repayment of all or a portion of your debt. It is better than bankruptcy for your credit score and doesn’t impact your ability to be a director of an incorporated business.

Consumer Proposals are a great way to allow you to pay off debt in a more manageable way. For small business owners, this also means that business assets will remain unaffected and credit may still be available. Spergel can help you find the best option for you and your small business.

If you are a small business owner or self-employed individual considering bankruptcy, contact the debt professionals at Spergel. Spergel will outline the options available to you and help you deal with your debts in a way that right for both you and your business.

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