Archive for Category 'Money Problems', page 2

Question: Hi I am responding in relation to Feb 11, 2009 question about bad debt showing on credit rating. If it is from 2004 when the debt was last paid can the collection agency legally come after you for the money in 2009. We have 2 third party collections on our equifax report and contacted the collection agencies on our own to try to work out a settlement offer. However, I think there is a limitation and would like to know if I really have to pay or is there some way of having it removed from the credit record or taking it to court and not having to pay because it has been so long.

Curious to know what legal rights we have.

Thanks
T

Answer: First, collection agencies are regulated provincially, so the rules may be different in different policies.

Second, each credit bureau has different policies.  For example, Equifax keeps information on file for six years from the date of last activity.  Of course the date of last activity will change, each time they creditor attempts to contact you or take other action against you.

Third, each province has a different Statute of Limitations period.  For example, in Ontario, Canada, if it has been more than two years since you have made a payment, it is difficult for the creditor to obtain a judgment against you.

Finally, you can negotiate with the creditor, or if you have other debts file a consumer proposal or bankruptcy to legally deal with the debt.

The correct answer will depend on your situation.

Question: is it possible to participate in a debt settlement plan for property taxes in arrears?

Answer: No, your municipality will want all of their money in full.  Your best option is to work out a payment plan with them, and get caught up over a period of time.

Question: In the case that I apply for a consumer proposal, do I risk losing any of my assets? For example I own a boat valued at 30,000.00 dollars. Could that be taken away from me even if it held as collateral on a personal loan. If so would it be wise to get that personal loan secured.

Answer:  One of the main reasons for filing a consumer proposal is so that you don’t lose your assets.  The concept behind a consumer proposal is simple: you offer your creditors more than they would get if you filed bankruptcy, but you make the payments over a longer period of time, so it’s affordable for you.

If you own a $30,000 boat with no loans against it, it is likely that you would lose it in a bankruptcy.  Therefore, if you file a proposal, you will need to offer the creditors more than $30,000 so you can keep the boat.

If the boat is security for a loan, then the bank with the loan has first rights to the boat in a proposal or bankruptcy.  In most cases if you continue making the payments to them they will allow you to keep the boat.  Of course if you are in financial difficulty and are having trouble making payments, you will need to determine whether or not it makes sense to keep the boat: surrendering it may be the most prudent financial decision.

The rules in this area are somewhat complex, so we suggest you contact a licensed trustee for more information.

Question: I am two months late on my credit card payment because my business is losing money in this recession and I haven’t taken a salary in 8 months. If it goes to collections, I know they can garnish my wages (which are $0 right now) and take funds out of my bank account (which is also close to $0 right now). But can they take my RSP and put a lien on my house?

Answer:  In most cases RRSPs are exempt from seizure.  In order for a credit card company to be able to put a lien on your house they would first have to sue you, win, and then enforce the judgment through a lien.  That is a very unusual step for a credit card company to take.

To start, you should open a new bank account at a new bank (where you don’t owe any money), so that you are in control of the funds that you have.  Then, you should consult a credit counsellor or a trustee in bankruptcy to explore your options.

Question: Does credit counselling affect your credit rating? If so how? I still have a decent rating but does it have to drop before I qualify? I’m looking for solutions before it gets to that but I can’t do it by myself.

Answer: Yes, a debt management plan (credit counselling) does affect your credit rating.   According to Equifax, Canada’s largest credit reporting agency, credit counselling remains on your credit report for three years after all payments are finished.

Your credit rating does not have to drop before you qualify.  You can apply for credit counselling at any time.  We suggest you read our article on how to deal with your money problems for full information.

Question: I own a house that is worth 144k but owe 130 on it. I have gone in debt 91k on credit cards and my personnel line of credit. I have never missed a min payment but have used my overdraft on my checking account. I have a full time job that earns 88 thousand per year but know I am in serious trouble. Currently I pay over 1400 in fees and interest and am only heading backwards with nothing on the principle. I have gone to the bank for a debt consolidation loan but have been declined as a result of my overdraft. I know I need help but am unsure of my alternatives.

Answer: Great question.  With the decline in the real estate market, and with the recession, many people find themselves with houses with minimal equity, and with a lot of debt.  You have a few choices for dealing with your debt:

1. Attempt to pay it off on your own.  That means you will need to prepare a detailed budget,  and determine what you can afford to pay.
2. Decide whether or not it makes sense to keep your house.  If you can’t afford the payments, it may be prudent to sell the house and lower your living costs by renting.
3. Consider a debt consolidation loan to reduce your monthly interest costs.
4. If you can’t afford a debt consolidation loan, consider credit counselling.
5. If that’s not affordable, consider a proposal.
6. If none of those options work, the final option is personal bankruptcy.

To evaluate these options, use our debt options calculator, and then contact an expert for more information.

Question: My husband passed away recently, and at his death, had $11,000 of credit card debt. He owned three cards, all in his name only. I am a pensioner with a substantial mortgage to carry now. Am I responsible for paying off his credit card debts ? Can I refuse to do so without anyone coming after me for money?

Thanks

Answer: Yes, his debts are his debts.   No-one can pursue you for his debts.  It is a common misconception that because you are married, you automatically become responsible for your spouse’s debts.  That is not the case.  You are only responsible for a debt if you signed for that debt.

If you were joint on the credit cards with your husband, than you are responsible.  If the cards were solely in his name, and if you never had a card or used the card on his account, you are not liable for it.  More information can be found in this article about whether filing for bankruptcy affects your spouse, and in this article about debts that are joint with your spouse.

Question: I do not want to claim bankruptcy. I have about $25,000 debt, credit cards, loans etc. still good credit. been doing all my min payments. Don’t have a job. min payments are about all I can do. Am not getting anywhere with my debt. Will remain in debt forever if i don’t get help. Can anything be done?

Answer:  You have a few options.

First, you could continue doing exactly what you are doing until you find a job.  You make your minimum payments to keep your rating positive, and then when you are back to work you can work on paying down your debt.

Second, you could file a debt management plan with  a not for profit credit counsellor who will work out a repayment plan where you repay your debts in full, but at a low or zero rate of interest.

Third, you could file a consumer proposal where you repay a portion of your debts.

Both a debt management plan and a consumer proposal require you to have enough money each month to make payments on your debts.  If you are not working that may not be possible, so you will need to review your budget to see exactly how much you can afford each month.

Finally, as a last resort bankruptcy is an option.  If you are not working you have no wages, so your wages cannot be garnisheed, so bankruptcy is not necessary to prevent a wage garnishment.  However, you may decide that it is better to deal with your debts now, so that when you return to work you do not have the stress of the debts.

We suggest you consult a licensed bankruptcy trustee to review your options in detail, and help you decide which option is best for your.

Question: I have just completed my debt consolidation program and they are helping me get all my files closed. It seems as soon as that process has begun, I get a call from a collector saying that I owe the gas company in Ontario $150+ I told them that this account is with a credit counseling service and to talk to them as this has been paid and I have just completed my program.
My councilor told me after talking with them, that this account was for another address from 8 years ago and wasn\’t the same account as the one they paid off. I only ever had 2 accounts for 2 different residences; the first account was closed August 24, 2001 and paid off, way before I entered credit counseling. The second was closed in October 31, 2005 when I moved to Calgary. Here comes the fishy part, I call the Collection Agency and asked them for details. They did mention the following: They have both addresses on file; they said the debt relates to a final metre read in 2005. I confronted them with “Why would a gas company do a metre read on an account closed for 4 yrs?” I then asked for everything they have in writing their reply is they don’t have any papers, they just downloaded my file and saw a balance to collect. I asked for anything again and they replied “I could send a collection letter-oh, wait, sorry, no I can’t there is a note here that I can\’t send any collection notices because there is an investigation”. He would not say WHO is being investigated-is it the gas company, is it me or is it them? I am inclined to believe the latter. I asked for the exact account number they had connected to this debt, and it is not mine. I knew it at the time but kept my mouth shut. I pulled my files and I have an invoice from each address that clearly shows my former account numbers. The number they supplied is very close to the second account I had but is off by a digit. The facts I know are if this relates to address #1, the statute expired in 2007. Even if this relates to address #2 they still would have had to act by the end of 2007, and besides, the credit counseling service would have paid this because I supplied the most recent bills and debts records to them. My question is: could this be a 3rd party collection agency I read about on your site or am I being defrauded or scammed somehow. Should I be on my guard?

(PS: I just Googled the company name and found a message board from others who have had similar weird calls from these guys-including somebody who was told they owe a cell company for an account 4 yrs ago and they never had an account with this company )

Answer:  You should be on guard.  It could be legitimate, but it is also possible that it’s a scam.

Whenever you get a call from a collection agency, ask them to send you a letter confirming the amount owing.  Then you have something in writing.  You are correct that it is highly unlikely that they will commence legal action for a debt from four years ago.

It’s a good scam, because usually they are asking for a relatively small amount of money (say $200 from an old hydro bill) and a lot of people, rather than fighting it, simply pay the money.

Question: My friend is raising a grandchild who is now 16 . My friend has legal custody & has been receiving the Child tax benefit for the child since 1997. Revenue Canada decided to audit her this year.They requested a number of documents which she supplied.Apparently the documentation was not good enough though it was all that they requested from her.They then requested more documents which she also supplied.They have suspended her CTB payments & sent her a letter saying she owed $9000.00. The next day she received another letter saying she owed $12000.00. My question is this:If she cannot get this straightened out & they still insist that she owes this money, will they take that money from her pension? She has no other assets.I know that you get many questions everyday but she is at her wits end & does not know what more she can do s& she is thinking the worst & I would really like to be able to give her something positive to look at. Hopefully, this question will be of enough interest to warrant an answer.Thank you for taking the time to read this.
you for taking the time to read this.

Answer: Yes, Revenue Canada  has the power to deduct money from CPP or OAS if they are owed money.  We suggest your friend continue to talk to CRA to reach a settlement.  If that doesn’t work, she should call her MP and see if they can intervene on her behalf.