The people I talk to are always concerned about a lawsuit, I should state first that I am not a lawyer and this article is not legal advice and should not be used as a substitute for the advice provided by a licensed expert. This article is for informational purposes only and based solely on my 14 years of debt management experience.
Anytime you borrow money as a loan or in the form of a credit card you are entering into an agreement. Creditors use high priced lawyers to draft carefully worded agreements so they do not lose their money. You need to understand that ANYTIME you are in breach of a contractual arrangement you are exposing yourself to a lawsuit.
The fact of the matter is there are hundreds of thousands to literally millions of contacts broken for not paying debt daily in North America. The creditors simply do not have the resources or the capacity to sue every person that does not pay.
But they can certainly threaten a lawsuit to everyone that does not pay. Typically a very tiny percent of people ever get sued for not paying their debts, most just get harassed by bill collectors and get nasty collection letters that typically are not worth the paper they are written on.
Launching a lawsuit to collect a debt is generally a business decision and not a personal one. A creditor must incur more debt in the form of legal fees and court costs to even begin the process, not to mention the time needed to gather the evidence and put it all together. In making this decision a creditor will weigh out if it is worth their while to throw more good money after bad trying to collect debt with a lawsuit or just letting collection agencies irritate you hoping to be paid at some point later.
They are not concerned with if they will win or not. If you borrowed the money and did not pay, they will win.
What creditors are concerned with is whether or not they can collect on the judgment once they win. A judgment allows the creditor to take the money from you without asking. It can be in the form of a lien on your home, bank account or garnishment on your wages. But if they have no idea where to collect on a judgment it's a pretty bad business decision to sue someone with nothing.
The 4 main things to consider when launching a lawsuit is:
Can they find you?
This may seem obvious and silly but if they don't know where you are, it's a mistake to waste time and money getting a judgment they can never collect on.
How much is owed?
Generally speaking anything less then $1,000 is a colossal waste of time; they will usually pass on suing these balances. Debts under $10,000 fall under the small claims courts laws in Ontario (check your region) and are fairly easy to sue, they don't consume vast resources. In fact I have seen creditors limit their claim to $10,000 when slightly more is owed so they can take advantage of the small claims court rules. If you owe $10,000 or more it will take much more in the way of resources to obtain a judgment so only those people with sufficient and clear assets to pay a judgment are usually ever considered. But if you do have to answer a lawsuit for $10,000 or more you are liable for a lot more court costs and legal fees incurred.
What assets do you own?
If you are a homeowner with any equity you are a primary target for a lawsuit if you aren't paying your debts, you can't pick up a home and move it. It's great security for a judgment. You can't do any financing or sell it with a lien on the title so it is almost 100% guaranteed to be paid. Cars, boats, household goods, furniture or any other goods that can be moved and hidden are almost never targeted to satisfy a judgment. Another problem with these items is they generally depreciate and are worth next to nothing after factoring the cost to collect and sell them.
Do they know where you work?
Employment income can be garnished. There is no fixed amount of your pay, it's up to the courts to decide but usually less then 20% of your pay is common. The problem here is the creditor must first know where you work, and further to that if you quit your job they are left with nothing unless they can find out where you end up next. Finding out where someone works can be next to impossible sometimes however it can be done. They will also consider the type of job you have, more secure, higher paying, longer running jobs are more attractive to garnish then short term lower paying jobs.
If you are having difficulty in paying your bills and are afraid of a lawsuit, it's probably a good idea to limit your communication until you have sufficient resources available to pay the debts. Bill collectors are very good at probing and getting information from you that can be used later on for a lawsuit. Talking about your job, your home or other assets can only increase your chance of getting sued.
If you owe debt, deal with it. After food, shelter and your basic life needs, paying debt should be your next priority. Sitting on debt longer only costs more, closes doors and limits your options in life. Do it on your own, but if you find the balances keep going north and haven't come down then seek help now. Bankruptcy and Debt Settlement are great options if you owe more then $10,000. Anything less then that is a good candidate for credit counseling. But the bottom line is don't contemplate doing something about it, eliminate it.
Richard Cooper is Founder & CEO at Total Debt Freedom Inc. Canada's most respected debt settlement company. Total Debt Freedom offers debt settlement plans that can save you 50-70% of what you owe and get you debt free in 1 - 3 years. http://www.totaldebtfreedom.ca
Monday, March 24, 2008
Tuesday, March 18, 2008
Debt Settlement - The Facts
The number one question people ask me when they need debt relief is: does debt settlement ruin my credit rating?
A lot of articles have been published from some sources that claim to be experts on this new method of debt help; so to clear things up, no it wont ruin your credit.
The reason is you can only qualify to settle your debt if you are behind in your required monthly payments so your credit rating has already gone south. Debt settlement hasn't won't ruin your credit, its already bad if you qualify to settle your debt.
If you can afford to make your monthly payments and are up-to-date then why would you consider a settling your debts? Those that can qualify for this type of debt relief will be pleased to know that it is usually the most affordable and fastest way to get rid of your credit card debt.
Debt Settlement is not an option for people with good credit and regularly pay on time, this form of debt help only works when you are already behind and a slow payer. Only those unable to make their payments should consider hiring a debt settlement company.
Usually the worst thing you can do to your credit is file for bankruptcy. Bankruptcy should only ever be considered as a last resort after you have explored and exhausted other methods of debt relief. Second to bankruptcy is credit counselling services (for and not-for profit alike), these plans run on average for 60-72 months, place a R7 on your credit report and do not reduce the principal you owe.
A debt settlement plan will get you out of debt in 1 month if you are a qualified homeowner or in 24-36 months if you are not. Unlike credit counselling and bankruptcy, with a debt settlement company you can still qualify for a mortgage to consolidate the debt you owe and you often pay back about half of what you originally owed. $50,000 in credit card debt could be settled and gone in one month with a $25,000 second mortgage. Hundreds of Canadian's are still in their homes today because debt settlement saved them from going bankrupt. Homeowners should do their homework and ask questions, only deal with a company that is well respected within the mortgage community and has been settling debt with the proceeds of mortgage financing for several years.
Remember there is no form of debt help that offers an immediate improvement to your credit score and you can only qualify to settle your debt if you are behind. Negotiating settlements on your debts does the least amount of damage only because it wipes out debt the fastest. In the last several years I have seen many people on the verge of bankruptcy actually improve their credit score by around 20% in 12 months if they have sufficient equity in their home to settle their credit card debt with a mortgage. Once you have cleared up the mess it's important to follow some important steps so you can build your credit score. Any good debt settlement company that assists homeowners will provide this knowledge for free.
The best way to have a good credit rating is to pay your bills in full every month and not carry a balance. If you have to carry a balance always keep it below 50% of your credit limit otherwise even if you make the minimum required payment your credit score will start going south. If you are suffering financially then debt settlement will always be the quickest path to total debt freedom and do the least amount of damage to your credit rating.
Richard Cooper is Founder & CEO for Total Debt Freedom Inc. Canada's most respected debt settlement company. Originally conceived for the mortgage community in 2003 to help fund more sub-prime mortgages and fix turn downs due to bad credit; Total Debt Freedom also offers debt settlement plans up to 36 months for those that aren't homeowners. http://www.totaldebtfreedom.ca
A lot of articles have been published from some sources that claim to be experts on this new method of debt help; so to clear things up, no it wont ruin your credit.
The reason is you can only qualify to settle your debt if you are behind in your required monthly payments so your credit rating has already gone south. Debt settlement hasn't won't ruin your credit, its already bad if you qualify to settle your debt.
If you can afford to make your monthly payments and are up-to-date then why would you consider a settling your debts? Those that can qualify for this type of debt relief will be pleased to know that it is usually the most affordable and fastest way to get rid of your credit card debt.
Debt Settlement is not an option for people with good credit and regularly pay on time, this form of debt help only works when you are already behind and a slow payer. Only those unable to make their payments should consider hiring a debt settlement company.
Usually the worst thing you can do to your credit is file for bankruptcy. Bankruptcy should only ever be considered as a last resort after you have explored and exhausted other methods of debt relief. Second to bankruptcy is credit counselling services (for and not-for profit alike), these plans run on average for 60-72 months, place a R7 on your credit report and do not reduce the principal you owe.
A debt settlement plan will get you out of debt in 1 month if you are a qualified homeowner or in 24-36 months if you are not. Unlike credit counselling and bankruptcy, with a debt settlement company you can still qualify for a mortgage to consolidate the debt you owe and you often pay back about half of what you originally owed. $50,000 in credit card debt could be settled and gone in one month with a $25,000 second mortgage. Hundreds of Canadian's are still in their homes today because debt settlement saved them from going bankrupt. Homeowners should do their homework and ask questions, only deal with a company that is well respected within the mortgage community and has been settling debt with the proceeds of mortgage financing for several years.
Remember there is no form of debt help that offers an immediate improvement to your credit score and you can only qualify to settle your debt if you are behind. Negotiating settlements on your debts does the least amount of damage only because it wipes out debt the fastest. In the last several years I have seen many people on the verge of bankruptcy actually improve their credit score by around 20% in 12 months if they have sufficient equity in their home to settle their credit card debt with a mortgage. Once you have cleared up the mess it's important to follow some important steps so you can build your credit score. Any good debt settlement company that assists homeowners will provide this knowledge for free.
The best way to have a good credit rating is to pay your bills in full every month and not carry a balance. If you have to carry a balance always keep it below 50% of your credit limit otherwise even if you make the minimum required payment your credit score will start going south. If you are suffering financially then debt settlement will always be the quickest path to total debt freedom and do the least amount of damage to your credit rating.
Richard Cooper is Founder & CEO for Total Debt Freedom Inc. Canada's most respected debt settlement company. Originally conceived for the mortgage community in 2003 to help fund more sub-prime mortgages and fix turn downs due to bad credit; Total Debt Freedom also offers debt settlement plans up to 36 months for those that aren't homeowners. http://www.totaldebtfreedom.ca
Credit Counseling - What You Need to Know Before You Sign up
On the one hand, credit counselling can be a good way to resolve debt while avoiding bankruptcy. On the other hand, it can be like an onion; once you peel back the layers, you may cry after you see what you are doing.
Consumer credit counselling service companies organize themselves as either for-profit or not-for-profit. Recently, not-for-profit Credit Counselling in America has been in the media and under the spotlight of the Internal Revenue Service ("IRS"). The IRS has cracked down on some of the industry's biggest players. Forty-one credit counselling companies had their tax exempt (not-for-profit) status revoked; they found that many companies didn't offer the level of counselling or education required in order to qualify for a tax-exempt status.
What credit counselling companies do (regardless of profit status) is arrange for you to pay back your full principal balance(s) on terms that are easier for you to service such as a longer amortization term and/or a reduced interest rate. What this means is that if you owe $10,000 and you are paying an average of 15% interest on all your debts, you will still owe $10,000 but they will hopefully reduce your interest rate to at least half of your original rate and set more affordable payments usually over a longer period of time. Provided you can afford the entire plan and fees, you will be debt free at some point. Remember not-for-profit does not mean free, they still charge you a fee.
You can actually call your creditor and do this yourself on your own at no cost. Most banks have their own internal counsellors that you can negotiate payment terms with that are more within your budget but this has to be done before the debt is assigned to a collection agency.
Credit counselling is reported to your credit report as a R7 and viewed negatively by every credit grantor. As a result, if you are in a 7 year repayment plan, don't count on using credit cards, getting a car loan or mortgage for the next 7 years plus the time it takes you to re-establish your credit rating.
The origin of credit counselling goes back to the 1980's when grantors got together and created it in order to recover money from people in debt. The new consumer credit counselling banner at the time was distanced from the credit grantors under a friendlier not-for-profit status which created trust and it worked well with the public. People signed up in droves and for-profit companies followed suit shortly there-after.
If you owe less then $10,000, credit counselling probably isn't a bad idea and a good alternative to bankruptcy. However, people still fail at these plans because they take a long time and a lot of money is consumed by maintenance fees over several years.
A new entry to the debt management marketplace has been debt settlement. Debt settlement has been a popular option in America and the movement has been gathering momentum in Canada. Unlike credit counselling, debt settlement actually reduces the principal balance owed by you to around 40%-70% of your original principal balance. A credit counselling service doesn't do that, it only freezes or reduces your interest rate.
If you owe more than you can manage, consider debt settlement as an option. It's an excellent opportunity to wipe out your debt quickly while saving you a substantial amount of money without doing the same damage to your credit rating as bankruptcy would. I have seen people with $50,000 of debt totally debt free in as little as 30 days if they have the right resources. Others may take up to 36 months depending on their ability to settle. Debt settlement companies are also an agent acting in your best interest and are not directed or managed by the very same people you owe the way that credit counselling companies are. In most cases, the fees of debt settlement companies are based on the money you save so that means they are working to save you as much as possible. See http://totaldebtfreedom.ca/ for more information on debt settlement.
Richard Cooper is Founder & CEO for Total Debt Freedom Inc. Canada's most respected debt settlement company. Originally conceived for the mortgage community in 2003 to help fund more sub-prime mortgages and fix turn downs due to bad credit; Total Debt Freedom also offers debt settlement plans up to 36 months for those that aren't homeowners. http://www.totaldebtfreedom.ca
Consumer credit counselling service companies organize themselves as either for-profit or not-for-profit. Recently, not-for-profit Credit Counselling in America has been in the media and under the spotlight of the Internal Revenue Service ("IRS"). The IRS has cracked down on some of the industry's biggest players. Forty-one credit counselling companies had their tax exempt (not-for-profit) status revoked; they found that many companies didn't offer the level of counselling or education required in order to qualify for a tax-exempt status.
What credit counselling companies do (regardless of profit status) is arrange for you to pay back your full principal balance(s) on terms that are easier for you to service such as a longer amortization term and/or a reduced interest rate. What this means is that if you owe $10,000 and you are paying an average of 15% interest on all your debts, you will still owe $10,000 but they will hopefully reduce your interest rate to at least half of your original rate and set more affordable payments usually over a longer period of time. Provided you can afford the entire plan and fees, you will be debt free at some point. Remember not-for-profit does not mean free, they still charge you a fee.
You can actually call your creditor and do this yourself on your own at no cost. Most banks have their own internal counsellors that you can negotiate payment terms with that are more within your budget but this has to be done before the debt is assigned to a collection agency.
Credit counselling is reported to your credit report as a R7 and viewed negatively by every credit grantor. As a result, if you are in a 7 year repayment plan, don't count on using credit cards, getting a car loan or mortgage for the next 7 years plus the time it takes you to re-establish your credit rating.
The origin of credit counselling goes back to the 1980's when grantors got together and created it in order to recover money from people in debt. The new consumer credit counselling banner at the time was distanced from the credit grantors under a friendlier not-for-profit status which created trust and it worked well with the public. People signed up in droves and for-profit companies followed suit shortly there-after.
If you owe less then $10,000, credit counselling probably isn't a bad idea and a good alternative to bankruptcy. However, people still fail at these plans because they take a long time and a lot of money is consumed by maintenance fees over several years.
A new entry to the debt management marketplace has been debt settlement. Debt settlement has been a popular option in America and the movement has been gathering momentum in Canada. Unlike credit counselling, debt settlement actually reduces the principal balance owed by you to around 40%-70% of your original principal balance. A credit counselling service doesn't do that, it only freezes or reduces your interest rate.
If you owe more than you can manage, consider debt settlement as an option. It's an excellent opportunity to wipe out your debt quickly while saving you a substantial amount of money without doing the same damage to your credit rating as bankruptcy would. I have seen people with $50,000 of debt totally debt free in as little as 30 days if they have the right resources. Others may take up to 36 months depending on their ability to settle. Debt settlement companies are also an agent acting in your best interest and are not directed or managed by the very same people you owe the way that credit counselling companies are. In most cases, the fees of debt settlement companies are based on the money you save so that means they are working to save you as much as possible. See http://totaldebtfreedom.ca/ for more information on debt settlement.
Richard Cooper is Founder & CEO for Total Debt Freedom Inc. Canada's most respected debt settlement company. Originally conceived for the mortgage community in 2003 to help fund more sub-prime mortgages and fix turn downs due to bad credit; Total Debt Freedom also offers debt settlement plans up to 36 months for those that aren't homeowners. http://www.totaldebtfreedom.ca
Credit Card Offers - Using Promotional Offers To Pay Off Debt
Beware of the special and introductory offers at ridiculously low interest rates. It's generally a bad idea to use credit cards to consolidate debt. I get bombarded with offers of anywhere from 1.99% - 4.99% credit cards all the time.
With 5 year mortgage rates hovering in the 5.99% range today for people with perfect credit how can credit card companies afford to offer a 1.99% rate on an unsecured credit card? They can but only in the short term to get your business.
I read the fine print on the back and the promotional rate only lasts for 9 months after which it goes up to the non-promotional interest rate of 19.99%. One offer didn't even tell me what the non-promotional rate was on the mailed offer; I had to look it up on their website to find out. In many cases promotional interest rates are based only on balance transfers; what that means is you only get the lower interest rate if you move other credit card balances to the new card being offered.
Be careful and do your homework, we have seen many people lured by special offers only to find when the promotional period ends so do their chances of paying off the debt.
People can get into trouble if they don't read the fine print and see what they are signing up for; when things appear to be too good to be true they usually are.
For credit cards follow these simple rules of thumb and (1) never charge anything to a credit card you cannot afford to pay off in full when you get the bill. (2) Credit cards and promotional offers should never be used to finance a lifestyle you cannot afford. (3) Live within your means and save money every month, rainy days do come and sometimes when it rains it pours so it's a good idea to have 3 months salary in the bank.
If you are drowning in debt, pay it off. If you can't and need help then look for the assistance of a reputable debt settlement company that will take the time to provide a free assessment on your situation.
Richard Cooper is Founder & CEO for Total Debt Freedom Inc. Canada's most respected debt settlement company. Originally conceived for the mortgage community in 2003 to help fund more sub-prime mortgages and fix turn downs due to bad credit; Total Debt Freedom also offers debt settlement plans up to 36 months for those that aren't homeowners. http://www.totaldebtfreedom.ca
With 5 year mortgage rates hovering in the 5.99% range today for people with perfect credit how can credit card companies afford to offer a 1.99% rate on an unsecured credit card? They can but only in the short term to get your business.
I read the fine print on the back and the promotional rate only lasts for 9 months after which it goes up to the non-promotional interest rate of 19.99%. One offer didn't even tell me what the non-promotional rate was on the mailed offer; I had to look it up on their website to find out. In many cases promotional interest rates are based only on balance transfers; what that means is you only get the lower interest rate if you move other credit card balances to the new card being offered.
Be careful and do your homework, we have seen many people lured by special offers only to find when the promotional period ends so do their chances of paying off the debt.
People can get into trouble if they don't read the fine print and see what they are signing up for; when things appear to be too good to be true they usually are.
For credit cards follow these simple rules of thumb and (1) never charge anything to a credit card you cannot afford to pay off in full when you get the bill. (2) Credit cards and promotional offers should never be used to finance a lifestyle you cannot afford. (3) Live within your means and save money every month, rainy days do come and sometimes when it rains it pours so it's a good idea to have 3 months salary in the bank.
If you are drowning in debt, pay it off. If you can't and need help then look for the assistance of a reputable debt settlement company that will take the time to provide a free assessment on your situation.
Richard Cooper is Founder & CEO for Total Debt Freedom Inc. Canada's most respected debt settlement company. Originally conceived for the mortgage community in 2003 to help fund more sub-prime mortgages and fix turn downs due to bad credit; Total Debt Freedom also offers debt settlement plans up to 36 months for those that aren't homeowners. http://www.totaldebtfreedom.ca
Filing Bankruptcy in Canada - Shocking Facts Most People Don't Know About
Bankruptcy can sometimes be your best way out of an overwhelming debt situation but you should consider how the law forces a Trustee in Bankruptcy to operate in Canada.
The bankruptcy process must be administered by a Trustee in Bankruptcy. Most Trustee's have both an accounting designation and a university degree. They must also pass a bankruptcy and law course. When considering filing for bankruptcy, always deal with a licensed trustee; that is, a trustee who has obtained a license from the Superintendent in Bankruptcy pursuant to the Bankruptcy and Insolvency Act (Canada).
What most people don't know is that even though you pay a Trustee for filing an assignment in bankruptcy, they are working on behalf of the creditors that you owe. That means even though you pay the Trustee to provide a fresh start for you, they are essentially an appointed agent for the creditors and looking after the best interest of the people that you owe. The Trustee works towards returning the creditors money back through the assets you hand over during the bankruptcy process.
You will present all of your debts and most of your assets to the Trustee. Very little of your assets are exempt from bankruptcy. In Ontario for example, you may keep your car if it is worth less than $5,650, necessary and ordinary wearing apparel up to $5,650, certain tools up to $11,300 if required by your trade, up to $11,300 of furnishings and certain types of life insurance. Most of your other assets are available for seizure and may be lost including your home, and your investments (except RRSP's and pension plans in certain cases). As a result, always consider doing everything you possibly can do to avoid going bankrupt.
If you owe more then $10,000 and your debts have been listed to a collection agency, consider debt settlement as an option. A debt settlement company can help avoid bankruptcy and works towards stopping collection calls by acting as your agent and negotiating a settlement with your creditors. It is an excellent way for you to wipe out your debt fast while saving you a substantial amount of money. In most cases you pay back about half of what you originally owed the creditors and that should include the fees. I have seen people achieve total debt freedom in as little as 30 days if they have access to a lump sum of money; anyone who is a homeowner or has family willing to help should definitely consider this option. Others may take 24-36 months to settle their debt. Unlike a Trustee a debt settlement company is acting for you only; in most cases fees charged are based on the money you save. That means that they will work to save you as much as possible. See http://totaldebtfreedom.ca/ for more information on debt settlement in Canada.
Always look at all of your options when considering bankruptcy. Generally speaking, if you suffer from financial hardship, have very limited income and most of your assets qualify as being exempt from bankruptcy seizure, then it's a good idea for you to get a free consultation from a Trustee about going bankrupt.
Don't be afraid of dealing with your debt. Sometimes bad things do happen to good people or maybe you just made some bad choices in life. We are only human. The worst mistake you can make is putting it off. Either way if you choose debt settlement or bankruptcy, start your path to debt freedom as soon as you can and get on with living life totally debt free.
Richard Cooper is Founder & CEO for Total Debt Freedom Inc. Canada's most respected debt settlement company. Originally conceived for the mortgage community in 2003 to help fund more sub-prime mortgages and fix turn downs due to bad credit; Total Debt Freedom also offers debt settlement plans up to 36 months for those that aren't homeowners. http://www.totaldebtfreedom.ca
The bankruptcy process must be administered by a Trustee in Bankruptcy. Most Trustee's have both an accounting designation and a university degree. They must also pass a bankruptcy and law course. When considering filing for bankruptcy, always deal with a licensed trustee; that is, a trustee who has obtained a license from the Superintendent in Bankruptcy pursuant to the Bankruptcy and Insolvency Act (Canada).
What most people don't know is that even though you pay a Trustee for filing an assignment in bankruptcy, they are working on behalf of the creditors that you owe. That means even though you pay the Trustee to provide a fresh start for you, they are essentially an appointed agent for the creditors and looking after the best interest of the people that you owe. The Trustee works towards returning the creditors money back through the assets you hand over during the bankruptcy process.
You will present all of your debts and most of your assets to the Trustee. Very little of your assets are exempt from bankruptcy. In Ontario for example, you may keep your car if it is worth less than $5,650, necessary and ordinary wearing apparel up to $5,650, certain tools up to $11,300 if required by your trade, up to $11,300 of furnishings and certain types of life insurance. Most of your other assets are available for seizure and may be lost including your home, and your investments (except RRSP's and pension plans in certain cases). As a result, always consider doing everything you possibly can do to avoid going bankrupt.
If you owe more then $10,000 and your debts have been listed to a collection agency, consider debt settlement as an option. A debt settlement company can help avoid bankruptcy and works towards stopping collection calls by acting as your agent and negotiating a settlement with your creditors. It is an excellent way for you to wipe out your debt fast while saving you a substantial amount of money. In most cases you pay back about half of what you originally owed the creditors and that should include the fees. I have seen people achieve total debt freedom in as little as 30 days if they have access to a lump sum of money; anyone who is a homeowner or has family willing to help should definitely consider this option. Others may take 24-36 months to settle their debt. Unlike a Trustee a debt settlement company is acting for you only; in most cases fees charged are based on the money you save. That means that they will work to save you as much as possible. See http://totaldebtfreedom.ca/ for more information on debt settlement in Canada.
Always look at all of your options when considering bankruptcy. Generally speaking, if you suffer from financial hardship, have very limited income and most of your assets qualify as being exempt from bankruptcy seizure, then it's a good idea for you to get a free consultation from a Trustee about going bankrupt.
Don't be afraid of dealing with your debt. Sometimes bad things do happen to good people or maybe you just made some bad choices in life. We are only human. The worst mistake you can make is putting it off. Either way if you choose debt settlement or bankruptcy, start your path to debt freedom as soon as you can and get on with living life totally debt free.
Richard Cooper is Founder & CEO for Total Debt Freedom Inc. Canada's most respected debt settlement company. Originally conceived for the mortgage community in 2003 to help fund more sub-prime mortgages and fix turn downs due to bad credit; Total Debt Freedom also offers debt settlement plans up to 36 months for those that aren't homeowners. http://www.totaldebtfreedom.ca
Wednesday, March 12, 2008
Bill Collectors - The 7 Biggest Lies Exposed
1. I am from the Legal Department and you are being sued. From my experience less then 2% of all debts listed to a collection agency ever result in formal legal proceedings and in most cases legal costs required to initiate a lawsuit have to be advanced by the collection agency. From a business perspective, it makes no sense to throw good money after bad hoping to recover the legal costs and the debt if you do not have enough assets available to satisfy the judgment being sought after. It's just not worth it to the collection agency. Bill collectors use the "legal department" threat only because it is scary and most people don't know better. The fact is that most bill collectors sit in a tiny 3"x 3" cubicle and pretend to be someone they really aren't on the phone.
2. I am going to garnish your pay cheque. In order to get any piece of your pay cheque, the bill collector needs a judgment from a court in their favour but the collectors will not seek a judgment unless they have reason to believe that you have enough assets to satisfy a judgment. Pursuant to Section 7(2) of the Wages Act (Ontario), no more than 20% of your wages may be garnished. A creditor can bring a motion to increase the amount of wages that may be garnished but a debtor also has the right to bring a motion to have such amount decreased. I have heard Collectors tell people they will garnish 50% of their pay but the truth is that even if they get a judgment, garnishments rarely exceed 15-20% of pay. Again they only use the threat because it scares people and most don't know any better.
3. If I don't have payment by 4 p.m. today, we are (Insert threat here).Bill collectors are paid a commission to do their job and so are the managers that are breathing down their necks in order to hit their targets. Some aggressive bill collectors can make six figures annually if they push people hard enough. They will tell you anything if they feel that it will result in a payment and a bigger commission cheque for them.
4. Pay in full, monthly payments are not an option.They want full payment from you because they make more money off you when you pay in full. Payments are always an option; in most cases going directly to the creditor will get you a monthly payment plan. It won't fix your credit but you will at least be able to stop the demand for full payment.
5. Collectors can call you as much as they like. Pursuant to Section 22(6) of R.R.O. 1990, Regulation 74 to the Collection Agencies Act (Ontario), there are restrictions on the frequency of calls that collection agencies can make to you. Despite what they may tell you a bill collector cannot harass you. If you register a letter requesting the collection agency to communicate with only in writing the calls should stop otherwise you can escalate their behavior to their ombudsman or provincial ministry to take further steps.
6. Collectors can call and harass your family, friends and neighbours. A collection agency can only contact a third party to confirm your home address and telephone number or your employer to confirm your employment, title and business address; that's it (Section 22(3) of Regulation 74 to the Collection Agencies Act). If the collector divulges details about the debt or tries to embarrass you, there are steps you can take to deal with and stop this behavior.
7. Bill collectors can talk to you any way they feel. Bill collectors can be obnoxious and rude; many think that insulting people will get the debt paid. Collection laws prevent this type of behavior reoccurring if you escalate it and deal with the issue. If you feel that they have mistreated you by using profanity, intimidating or coercive language, you can certainly stop it. They will most certainly deny the activity so a tape recorded conversation or voice message will be your best friend here.
Collection agencies and bill collectors have a bad reputation because they are a business like any other whose goal is to generate profits for its shareholders; its their job to push you hard to pay. There are ways to deal with the debt and their behavior but it takes time and a certain investment in researching your rights. Try not to avoid the debt but find a way of dealing with it. The only way to stop the collection activity is to pay the bill or go bankrupt. If you can pay the bills in full, do so as soon as possible.
If payment of your bills is not an option due to extreme financial hardship, you may wish to explore bankruptcy by consulting with a Trustee in your local yellow pages. Going bankrupt will most certainly deal with the debt but since it's detrimental to your credit rating, it should only be used as a last resort. Also, a Trustee is a court appointed agent for your creditors so even though you pay them for their service, the Trustee is looking after your creditors' best interests. Your debts are wiped out but so are most of your assets subject to certain limited exceptions and your credit report shows the effect for 7-10 years.
Debt settlement should be considered as an alternative to bankruptcy since it is quickly becoming one of the newest and best options in Canada to retire debt quickly and ethically. A debt settlement company will act as your agent, and negotiate a settlement with your creditors. Once the settlement is paid, the balance is written off and your credit report is updated to reflect that the debt is finalized. The time frame to settle debt can be anywhere from 1 month to 36 months depending on your ability. This is often the least expensive, least damaging to your credit and the fastest path to debt freedom.
Remember that bill collectors make a living off of trying to scare and intimidate people so they can earn a big commission cheque. Consider the source when they call and don't let bill collectors push you around, you have rights and can fight back and win!
2. I am going to garnish your pay cheque. In order to get any piece of your pay cheque, the bill collector needs a judgment from a court in their favour but the collectors will not seek a judgment unless they have reason to believe that you have enough assets to satisfy a judgment. Pursuant to Section 7(2) of the Wages Act (Ontario), no more than 20% of your wages may be garnished. A creditor can bring a motion to increase the amount of wages that may be garnished but a debtor also has the right to bring a motion to have such amount decreased. I have heard Collectors tell people they will garnish 50% of their pay but the truth is that even if they get a judgment, garnishments rarely exceed 15-20% of pay. Again they only use the threat because it scares people and most don't know any better.
3. If I don't have payment by 4 p.m. today, we are (Insert threat here).Bill collectors are paid a commission to do their job and so are the managers that are breathing down their necks in order to hit their targets. Some aggressive bill collectors can make six figures annually if they push people hard enough. They will tell you anything if they feel that it will result in a payment and a bigger commission cheque for them.
4. Pay in full, monthly payments are not an option.They want full payment from you because they make more money off you when you pay in full. Payments are always an option; in most cases going directly to the creditor will get you a monthly payment plan. It won't fix your credit but you will at least be able to stop the demand for full payment.
5. Collectors can call you as much as they like. Pursuant to Section 22(6) of R.R.O. 1990, Regulation 74 to the Collection Agencies Act (Ontario), there are restrictions on the frequency of calls that collection agencies can make to you. Despite what they may tell you a bill collector cannot harass you. If you register a letter requesting the collection agency to communicate with only in writing the calls should stop otherwise you can escalate their behavior to their ombudsman or provincial ministry to take further steps.
6. Collectors can call and harass your family, friends and neighbours. A collection agency can only contact a third party to confirm your home address and telephone number or your employer to confirm your employment, title and business address; that's it (Section 22(3) of Regulation 74 to the Collection Agencies Act). If the collector divulges details about the debt or tries to embarrass you, there are steps you can take to deal with and stop this behavior.
7. Bill collectors can talk to you any way they feel. Bill collectors can be obnoxious and rude; many think that insulting people will get the debt paid. Collection laws prevent this type of behavior reoccurring if you escalate it and deal with the issue. If you feel that they have mistreated you by using profanity, intimidating or coercive language, you can certainly stop it. They will most certainly deny the activity so a tape recorded conversation or voice message will be your best friend here.
Collection agencies and bill collectors have a bad reputation because they are a business like any other whose goal is to generate profits for its shareholders; its their job to push you hard to pay. There are ways to deal with the debt and their behavior but it takes time and a certain investment in researching your rights. Try not to avoid the debt but find a way of dealing with it. The only way to stop the collection activity is to pay the bill or go bankrupt. If you can pay the bills in full, do so as soon as possible.
If payment of your bills is not an option due to extreme financial hardship, you may wish to explore bankruptcy by consulting with a Trustee in your local yellow pages. Going bankrupt will most certainly deal with the debt but since it's detrimental to your credit rating, it should only be used as a last resort. Also, a Trustee is a court appointed agent for your creditors so even though you pay them for their service, the Trustee is looking after your creditors' best interests. Your debts are wiped out but so are most of your assets subject to certain limited exceptions and your credit report shows the effect for 7-10 years.
Debt settlement should be considered as an alternative to bankruptcy since it is quickly becoming one of the newest and best options in Canada to retire debt quickly and ethically. A debt settlement company will act as your agent, and negotiate a settlement with your creditors. Once the settlement is paid, the balance is written off and your credit report is updated to reflect that the debt is finalized. The time frame to settle debt can be anywhere from 1 month to 36 months depending on your ability. This is often the least expensive, least damaging to your credit and the fastest path to debt freedom.
Remember that bill collectors make a living off of trying to scare and intimidate people so they can earn a big commission cheque. Consider the source when they call and don't let bill collectors push you around, you have rights and can fight back and win!
Tuesday, March 4, 2008
Get out of Debt - The Secret
In order to get out of your debt, you must apply the secrets of debt freedom. These tips are the foundation of becoming debt free and creating options in your life.
There is an old saying that talks about stupidity. It goes something like "the definition of stupidity is doing the same thing over and over again, expecting a different result". For example, people don't keep turning on a cold water tap expecting hot water to pour out. So why would you keep doing the same thing with your debt? If it isn't going away you need to do something differently.
Ignoring the debt isn't going to make it go away. Blaming others for your mistakes is of no help, but hoping something will change is even worse.
You have to effect change in your life and not wait for it to happen. At the end of the day you have to want to get out of debt to make that change to your financial situation.
As a little 8 year old I can remember that burning desire for a bicycle one summer, my parents were poor so I had to figure out a way to get it on my own. I must have shoveled 50 driveways that winter in the freezing cold (and it snowed heavy that winter) at $5 a driveway to make the money. But I did it because I had the image of that bicycle burned into my minds eye.
I don't care if you owe $75,000, if you want out of debt bad enough, sit yourself down and figure out a way. Don't blame anyone else for your problems; take a good hard look in the mirror. The person looking back at you got you into debt, and believe it or not can actually get you out of it.
During my career I have seen winners and losers deal with all types of debt. I can tell you without a doubt the reason why people get out of debt is because they don't blame others, are serious about it, and do something to fix it. The main reason the losers are stuck with their debt is because they aren't serious about resolving it.
Brian Tracy, a motivational speaker, once stated that "you only have options if you can save money. If you are in debt, you have no options." What he means is you cannot quit your job, open a business, treat yourself to a luxury or even take a vacation. Being in debt severely limits your options in life. Once you find your reason for becoming debt free and plan it out, nothing can stop you.
There are a lot of great articles on getting debt help, some can do it all on their own and others may need help. Bankruptcy, Debt Settlement, and Credit Counseling are all viable plans. I personally believe (and have proven) that debt settlement does the least amount of damage to your credit and is the fastest and most cost effective way to debt freedom. Do your homework and start doing something about it.
Richard G. Cooper is Founder & CEO at Total Debt Freedom Inc. Canada's most respected debt settlement company. Total Debt Freedom offers debt settlement plans that can save you 50-70% of what you owe and get you debt free in 1 - 3 years. http://www.totaldebtfreedom.ca/
There is an old saying that talks about stupidity. It goes something like "the definition of stupidity is doing the same thing over and over again, expecting a different result". For example, people don't keep turning on a cold water tap expecting hot water to pour out. So why would you keep doing the same thing with your debt? If it isn't going away you need to do something differently.
Ignoring the debt isn't going to make it go away. Blaming others for your mistakes is of no help, but hoping something will change is even worse.
You have to effect change in your life and not wait for it to happen. At the end of the day you have to want to get out of debt to make that change to your financial situation.
As a little 8 year old I can remember that burning desire for a bicycle one summer, my parents were poor so I had to figure out a way to get it on my own. I must have shoveled 50 driveways that winter in the freezing cold (and it snowed heavy that winter) at $5 a driveway to make the money. But I did it because I had the image of that bicycle burned into my minds eye.
I don't care if you owe $75,000, if you want out of debt bad enough, sit yourself down and figure out a way. Don't blame anyone else for your problems; take a good hard look in the mirror. The person looking back at you got you into debt, and believe it or not can actually get you out of it.
During my career I have seen winners and losers deal with all types of debt. I can tell you without a doubt the reason why people get out of debt is because they don't blame others, are serious about it, and do something to fix it. The main reason the losers are stuck with their debt is because they aren't serious about resolving it.
Brian Tracy, a motivational speaker, once stated that "you only have options if you can save money. If you are in debt, you have no options." What he means is you cannot quit your job, open a business, treat yourself to a luxury or even take a vacation. Being in debt severely limits your options in life. Once you find your reason for becoming debt free and plan it out, nothing can stop you.
There are a lot of great articles on getting debt help, some can do it all on their own and others may need help. Bankruptcy, Debt Settlement, and Credit Counseling are all viable plans. I personally believe (and have proven) that debt settlement does the least amount of damage to your credit and is the fastest and most cost effective way to debt freedom. Do your homework and start doing something about it.
Richard G. Cooper is Founder & CEO at Total Debt Freedom Inc. Canada's most respected debt settlement company. Total Debt Freedom offers debt settlement plans that can save you 50-70% of what you owe and get you debt free in 1 - 3 years. http://www.totaldebtfreedom.ca/
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