You Can Combat a Notice of Garnishment: Here’s How!

When your wages are being garnished, whether by a creditor, the Canada Revenue Agency or the Family Responsibility Office, combating the garnishment may seem impossible. Fortunately, that isn’t the case – there are several options. This week we’ll work through them to help you regain control of your income.

A wage garnishment is a legal process whereby a creditor requires a third party (your employer or clients) to turn over to the creditor a portion of your wages or income. There are several types of wage garnishments.

  • If a creditor sues you and is successful in obtaining a judgement against you, they can have the court issue a Notice of Garnishment which forces your employer to garnish a portion of your wages and remit the money to the court to be dispersed to your creditor.
  • When the Canada Revenue Agency (CRA) garnishes your wages due to amounts owing, they do not need a court order to do so – they will simply send a letter to your employer and then your employer has to start garnishing you. In the case of CRA, your employment income can be garnished, as well as other income, such as pensions.
  • The Family Responsibility Office can garnish your wages for unpaid child support. Family Responsibility wage garnishments are the most difficult to combat because you will have to have a family lawyer go to court and get the court to agree to reduce or remove the garnishment.

Combatting the first two types of wage garnishments – ones imposed by creditors through the court and those imposed by CRA – can be dealt with in various ways.

Of course, one option is to head to court. This option is expensive and time consuming. You may have to pay a paralegal or lawyer to represent you, not to mention administrative fees. Additionally, there is no guarantee that you will be successful.

The easiest option, by far, is to pay the debt. First, evaluate if you can actually pay the debt. Of course, in a perfect world, if you could have paid off the debt in full you wouldn’t be in this situation.

If the debt is just too big and you can’t realistically pay it, you will need to look at the various options available to help you out of this situation.  A Licensed Insolvency Trustee can offer two types of debt solutions that can stop a garnishment, consumer proposals and bankruptcy.

Each option is different and the right solution depends on your income, household composition, assets and other factors. Keep in mind that a consumer proposal or bankruptcy won’t stop a Family Responsibility Office garnishment – but both will halt wage garnishments issued through the courts by creditors and by the CRA. In fact, as soon as your creditors, the court and/or CRA receives notice that you have filed a consumer proposal or a bankruptcy, they must stop the wage garnishment immediately!

If you’re concerned about a Notice of Garnishment, speaking with a trustee about your financial options is the first step to take to get the situation sorted out. At Spergel, we have the experience and knowledge to help you regain control of your wages.

Find out more by visiting today or call 310-4321.


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407 ETR Settles Class Action Lawsuit – Claim Deadline Approaches

The private operators of Ontario’s Highway 407 Express Toll Route (ETR) have agreed to pay $7,965,800 to settle a class action lawsuit with individuals who filed for bankruptcy or a consumer proposal and had their license plate renewals denied due to non-payment.

At Spergel, many of our clients who have filed a consumer proposal or a bankruptcy have had their license plates denied, even though they filed for the protection of a bankruptcy or a successful consumer proposal. Under the Bankruptcy and Insolvency Act (“BIA”) all monies owed at the date of the filing (“pre-insolvency debts”) of the consumer proposal or bankruptcy are compromised or discharged through the insolvency process, thus giving an individual a fresh start. There are only limited prescribed debts that survive bankruptcy, called “non-dischargeable debts”, and the 407 tolls are not one of them.

These individuals whose plates were denied might rely on their car to get to work, but would have been prevented from renewing their license plates. To allow a creditor to use a mechanism such as plate denial to enforce their debts outside the BIA frustrates the rehabilitative and “fresh start” principle of the insolvency system in Canada.

In April 2012, three representative plaintiffs brought the class action lawsuit to the Ontario Superior Court of Justice in Toronto on behalf of all drivers who incurred tolls and/or additional charges to the 407 ETR, and had their license plate denied after they had filed a consumer proposal or a bankruptcy proceeding. The action alleged that the toll highway consortium made improper use of provincial legislation to keep bankrupt or insolvent drivers from renewing their license plates.

In a separate matter, the Supreme Court of Canada issued a decision in November 2013, stating that the 407 ETR cannot deny license renewals to drivers who have been discharged from bankruptcy to enforce the payment of outstanding tolls and fines. The ruling was welcome news to drivers undergoing bankruptcy, as they no longer had to worry about their vehicle permit being denied renewal. However, this settlement compensates all those drivers who had their plates denied while this case was being argued.

Under the settlement, the 407 ETR agreed to a fund of nearly $8 million, without admitting liability.

Every eligible driver will receive a base payment of $200.00. They can also make a claim for additional compensation based on how long they were denied their plates and how much they paid 407 ETR or the Registrar of Motor Vehicles towards the pre-insolvency debt.
Eligible drivers should have received notice by mail, including a claim form. This must be submitted no later than March 27, 2017.If any of Spergel’s clients are having troubles getting their license plates renewed because of pre-insolvency 407 ETR tolls and fines – or haven’t received a claim form when they think they should have – please contact us immediately. Our experienced licensed insolvency trustees will help get you back in the driver’s seat.

If you, or someone you know, is dealing with debt problems, contact us anytime at the toll free number 310-4321, email us at or visit our nearest location for a free initial consultation with one of our trusted professionals. We will go through your individual needs and outline your options to help you take your first steps to getting a fresh start. You can also fill out our online assessment form and a Spergel representative will contact you directly.

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What is the Difference Between a Consumer Proposal and Bankruptcy?

For Canadians struggling to meet their financial obligations, a consumer proposal and bankruptcy are the two most popular debt management options available, and for good reason. Both can help you resolve your debt problems and stop collection action. However, there are also significant differences between the two – differences which are important to examine if you’re considering which one suits you best.

This week we are covering the difference between a consumer proposal and a bankruptcy.

In a consumer proposal, a Licensed Insolvency Trustee makes a formal proposal to your unsecured creditors based on various factors such as your total debt, who your creditors are, current income and the value of any realizable assets. If the majority of your creditors accept the proposal, it is legally binding on all creditors and you make a monthly payment which is collected by your Trustee and then paid to your creditors, generally on an annual basis. Once accepted, you do not have an ongoing obligation to report your income to the Trustee.  In addition, you are free to deal with your assets as they do not vest in the Trustee. The maximum term for a consumer proposal is 5 years, but you are able to pay it in full at any time once it has been accepted. Once you have completed the proposal payments, the consumer proposal is removed from your credit report after 3 years.

In a bankruptcy, the Licensed Insolvency Trustee determines the length of your bankruptcy and your monthly payment based on your household income and whether or not you have previously filed a bankruptcy. If you are a first-time bankrupt, you can be automatically discharged after 9 or 21 months; in the case of a second-time bankrupt, this term becomes 24 or 36 months; in a third or higher bankruptcy, the Trustee has to apply for a court date for your discharge following the expiry of 24 or 36 months.

The term of your bankruptcy will depend on whether or not you have “surplus income”, which is calculated using income standards for household sizes set out by the Superintendent of Bankruptcy. You are required to report your income to the Trustee for the bankruptcy period and the Trustee will average your net income after a certain period as described above.   If you have surplus income, you will be required to make a payment to the bankruptcy estate, generally 50% of the surplus income.

In addition, your assets vest in the Trustee in a bankruptcy.  There are provincial exemptions for certain assets such as a motor vehicle and personal effects.  In addition, where an asset is secured, the Trustee will calculate whether any equity exists in the asset.  If you have any realizable assets, you will have to make arrangements to pay the estate for the realizable value or release the asset to the Trustee.

Unlike a proposal, a bankruptcy does not have to be accepted by your creditors. Once a bankruptcy is filed, you are bankrupt until you receive your discharge. Furthermore, once filed, the Trustee manages your estate over the course of your bankruptcy. You will have ongoing responsibilities to the Trustee such as making agreed upon monthly payments, participating in two credit counselling sessions, and reporting your income until you are discharged. Once you are discharged, the bankruptcy will be removed from your credit report after 6 years from the date of discharge.

In both cases, if a creditor has taken collection action against you (even the Canada Revenue Agency) or has imposed an enforcement measure such as a wage garnishment or frozen your bank account, this is stopped once a bankruptcy or consumer proposal is filed.

As you can see, there are some important differences between a consumer proposal and bankruptcy. Both are an effective means by which to resolve your debt that has taken over your life.

To learn more about these options and to determine which option works for your, contact a Licensed Insolvency Trustee at Spergel. We can help you find a solution that meets your needs. Find out more by visiting today or call 310-4321.


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Myth Busting: Will a Consumer Proposal in Ontario Ruin Your Credit?

For many Canadians with debt problems, a consumer proposal represents a viable financial solution. In our experience, many people do not quite understand the impacts of a consumer proposal in Ontario, so this week we aim to clear up the misconception that a consumer proposal will ruin your credit.

To better understand why this perception exists, it is important to first understand the ratings on your credit report. Any lender you apply to for credit will look at your credit report.

Your credit report lists any and all credit activity. These activities are broken down into line items. Each creditor line item will have a letter assigned to it – either “I” or “R”. “I” stands for “installment credit” which represents loans and “R” stands for “revolving credit” such as credit cards. These letters are then followed by a number – 1 through 9.  1 means that you are up to date, a 2-5 signifies the number of months you are behind. When you are 2-5 months behind, paying the account up to date will return your rating to a 1. However, these late payments will remain on the report as history for a number of years.

If your credit is in worse shape, you may see a 7, 8 or 9. A 7 means credit counselling, an 8 signifies repossession and a 9 is a bad debt write off. A 7 remains on your credit for 3 years from when the debt is paid in full, whereas an 8 or 9 remains on your credit for 6 years from the date of last activity – even if you settle or repay the debt.

For example, if a creditor has sent your account to collections, in addition to the bad rating for that particular credit item, you may also have a collection item registered from the third party collection agency. These remain on your credit for 6 years from when they are settled or paid in full. Also, if your credit cards are at their limit, this will drastically reduce your credit score.

If you are habitually late at making payments, have defaulted on debts and/or have credit cards at or above their limits, your credit score has negatively been affected.

A consumer proposal in Ontario is registered on your credit report and removed 3 years from the date that it is paid in full. A consumer proposal is open and can be paid in full at any time. The maximum term for a consumer proposal is 5 years. However, since it can be paid at any time, the 3 year period on your credit report can begin much earlier.

Rebuilding your credit is critical after filing a consumer proposal and we highly recommend looking at credit products such as a secured credit card or secured GIC after your proposal to begin the rebuilding process. After a proposal, how you manage your new credit is also key – it is crucial that you do not make late payments and also manage credit card balances conservatively. Do not max them out, and as a rule never keep more than 50% of your limit as a balance.

If you are drowning in debt and are struggling to make even minimum payments, it might be time to consider what options are available to remedy the situation. A consumer proposal in Ontario may be one such option. For more information, please visit Spergel today at or call 310-4321.


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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.


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.


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.


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.


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.


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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