Getting Out of Debt ... Canadian Edition
First you require a copy of your credit report. The two major credit reporting agencies are Equifax and Trans Union Canada. You are entitled to 1 free credit report per year, or you can request a copy of your credit report if you were denied credit. Information on how to obtain your credit report is available in section I.
After receiving your credit report go through each item carefully, any incorrect information should be reported immediately, if you think your name is being used fraudulently you should contact both agencies and inform them of this. They will make a note on your file of this. After you have sent in information to get your file updated a copy of the new updated file will be sent. Note the incorrect information will not always be remove, this will require persistent on your part. Your next step would be to contact the reporting agencies (ie. Company that submitted this information.), the credit agencies should be able to provide a contact phone number for you. If after disputing this with the company and your file is still not updated, the next step would be to start legal actions against the company, this can be done through your local small claims court.
For information that is correct, unpaid bills, late payments, collection accounts … the next step would be to get these bills up to date, start a payment plan with the reporting companies, or consolidate your bills so you have one monthly payments. Getting your credit in order could take up to 7 years, don’t let this discourage because 7 years from now you may or will need to take out a loan (mortgage, car loan …).
There are a lot of companies currently advertising loans with bad credit, however the interest rate on these types of loans are very high so I would not recommend them.
Default loans, bills currently with a collection agency you can settle some of these accounts for a little as 50% of the outstanding balance. When trying to negotiate these settlements make sure you have the funds available to settle, else the is no point in negotiating.
Note: These are already bad debts and the collection companies may or may not threaten to file legal suits, this is possible though it is rarely done. If you are in a position where a suit is filed against you, don’t miss the court date. If you do a judgment will be made against you, which could lead to wage garnishments. Going to court in these case can be in your favor as you will be able to plea your case/situation to a judge who may be a lot more lenient on you.
Car Purchase
Instead of getting the latest model car, get a car that’s about 5 years old, if it is being financed the monthly payment will be a lot less, because older cars are usually cheaper.
Eg. If you wanted to get a new Honda Accord … get a 5 year old one instead, better yet get a 5 year old Honda Civic. I am not asking you to buy lemons, still perform the required check to sure the car is in good condition. You will also save a little on your car insurance.
If you currently own a late model car, try to get to sell. Money you make can help in the purchase of another car or leave some extra spending money, which you can use to pay of outstanding bills, or save towards a house down payment.
Car Insurance
Increase deductible to maximum amount usually $1000. This will save about $20/mth. Put that money into an money market fund account or an ING Direct account where it is easily accessible, thus in case of an accident and you do need this money its accessible. So if the deductible was $300.00 and you increase to $1000.00 the difference is an additional $700.00, and providing you don’t get in an accident within the first years of making this change you will have easily made this money back and more.
Deductible: The amount of out of pocket expense you are expected to pay towards your cars repair if you were to get in an accident.
Buy a Computer
- I believe that every home with a school age child should have a computer and printer. A decent computer can be purchase for around $500.00. The main purpose is for school use. This should not be purchased on credit, save towards a computer. Until then use the public library, some schools offer after school access to computers.
Owning property
- contribute to RRSP save for house down payment. Can use a maximum of 20,000 from RRSP towards your first home.
- Couple can use up to 20,000 each, total $40,000.
This money will have to be put back into your RRSP over a 15 year period starting 2 years after purchasing the house. Using the maximum amount $40,000 works out to be $222.22/mth, so you need to take this into consideration when working out your overall monthly payments. RRSP contributions used that is not paid back will be included as income and you will be tax accordingly. This is if you did not make any of the payments for that year and assuming you used the maximum amount the total would be 12x$222.22 = $2666.67. And if from your employment income you made $30,000 for the year, your total taxable income would be $32666.67.
Expenses to consider when purchasing a home
You first need a down payment, minimum 5% of total cost of home the more the better. Preferably 25% down payment, depending on your age, employment situation 25% may be too much. Along with your down payment there is what is considered closing cost which is usually another 3-5% of the value of the home, this amount is needed.
Eg. If a house cost $275,000.00, 5% of that is 13,750 + an additional $10,000 - $13,750. Total amount required $27,500.
Life insurance
- insure your life for your children. Take out a $50,000 term life insurance.
-
Home Business
- start a small home base business
- tax write-offs
- employ your children , spouse …. Have children start claiming tax, explain taxes/credit to children. With a home base business, you can pay your child/spouse as a sub-contractor to work for you providing the pay is reasonable for the job performed. Now say you pay your child $2666.67, with is below the personal amount of $7000.your child will not be taxed on this money. Your taxable income now goes back to $30,000.
Getting Employed
- get your resume done professionally
- educate yourself in your field of interest
- apply through job agencies
- post resume on job sites
Phone – get the basic phone service with call-waiting, buy an answering machine.
Cable – get the basic cable package. If there is a need for more channels try the MeTv package, considerably more than the basic package but a little cheaper than to Ultimate package. Contact your cable provider and have them send you information on the different packages available.
Building credit
While paying down your debt:
Get a secured credit card if you don’t already have one, or if you don’t qualify for a conventional credit card. You can apply for one on the internet by visiting http://www.capitalone.ca/ click on the ‘Credit Cards’ tab, under the ‘Capitol One Secured MasterCard’ click on button to ‘Apply Now’ …. Complete and submit form.
Within a couple of days you will receive a letter telling you how much you will need to deposit in order to obtain card. Follow instruction provided in the letter.
Again this card is to help you reestablish your credit, use once or twice, pay the bill on time. This card should not be used after the 2nd time.
Discipline is key.
After accumulating savings, some of that money to a guaranteed investment certificate (GIC) with a higher interest rate for a specific period of time. Then, request a small personal loan, secured with your GIC, from your banker.
Equifax Canada
Office: 110 Sheppard Ave. E
Toronto, ON
Office hours: Mon. – Fri. 9am – 4pm
Tel: 1-877-323-2598
For Consumers who want to obtain a copy of their personal credit report:
phone 1 800 465 7166 to request a copy of your report and further information
mail a written request with copies of two pieces of identification to:
Equifax Canada Inc.
Consumer Relations Department
Box 190 Jean Talon Station
Montreal, Quebec
H1S 2Z2
Form can be downloaded from: http://www.equifax.com/EFX_Canada/consumer_information_centre/docs/request_report_form_e.pdf
fax a written request with copies of two pieces of identification to: 514 355 8502
e-mail a request to: consumer.relations@equifax.com
Trans Union Canada
Residents of Canada are entitled to a free copy of their TransUnion Consumer Disclosure Report during each calendar year. This service is available by visiting one of TransUnion's offices across Canada, mailing in a request
If you have had an application denied within the last 60 days and a TransUnion credit report was used in the decision process, you are entitled to discuss your credit file with a TransUnion associate, by dialing 1-800-453-9528. Residents of Quebec, please contact 1-877-713-3393
To obtain a copy of your Consumer Disclosure report from TransUnion –
Telephone 1-800-453-9528
8:00 AM until 8:00 PM EST, Monday to Friday
Or write to:
TransUnion Canada
Consumer Relations Centre
P.O. Box 338, LCD 1
Hamilton, ON
L8L 7W2
Form can be downloaded from: http://www.tuscores.ca/Personal/consumerRelationsForm.jsp?locale=en_CA
Debt Consolidation Loan:
This is the process where one borrows money to pay off all outstanding bills. This is like put all your bills together in one. You now have one balance outstanding, and you make the monthly payment on this. This monthly payment is usually less than what you would have paid if all bills were paid separately.
.
After receiving your credit report go through each item carefully, any incorrect information should be reported immediately, if you think your name is being used fraudulently you should contact both agencies and inform them of this. They will make a note on your file of this. After you have sent in information to get your file updated a copy of the new updated file will be sent. Note the incorrect information will not always be remove, this will require persistent on your part. Your next step would be to contact the reporting agencies (ie. Company that submitted this information.), the credit agencies should be able to provide a contact phone number for you. If after disputing this with the company and your file is still not updated, the next step would be to start legal actions against the company, this can be done through your local small claims court.
For information that is correct, unpaid bills, late payments, collection accounts … the next step would be to get these bills up to date, start a payment plan with the reporting companies, or consolidate your bills so you have one monthly payments. Getting your credit in order could take up to 7 years, don’t let this discourage because 7 years from now you may or will need to take out a loan (mortgage, car loan …).
There are a lot of companies currently advertising loans with bad credit, however the interest rate on these types of loans are very high so I would not recommend them.
Default loans, bills currently with a collection agency you can settle some of these accounts for a little as 50% of the outstanding balance. When trying to negotiate these settlements make sure you have the funds available to settle, else the is no point in negotiating.
Note: These are already bad debts and the collection companies may or may not threaten to file legal suits, this is possible though it is rarely done. If you are in a position where a suit is filed against you, don’t miss the court date. If you do a judgment will be made against you, which could lead to wage garnishments. Going to court in these case can be in your favor as you will be able to plea your case/situation to a judge who may be a lot more lenient on you.
Car Purchase
Instead of getting the latest model car, get a car that’s about 5 years old, if it is being financed the monthly payment will be a lot less, because older cars are usually cheaper.
Eg. If you wanted to get a new Honda Accord … get a 5 year old one instead, better yet get a 5 year old Honda Civic. I am not asking you to buy lemons, still perform the required check to sure the car is in good condition. You will also save a little on your car insurance.
If you currently own a late model car, try to get to sell. Money you make can help in the purchase of another car or leave some extra spending money, which you can use to pay of outstanding bills, or save towards a house down payment.
Car Insurance
Increase deductible to maximum amount usually $1000. This will save about $20/mth. Put that money into an money market fund account or an ING Direct account where it is easily accessible, thus in case of an accident and you do need this money its accessible. So if the deductible was $300.00 and you increase to $1000.00 the difference is an additional $700.00, and providing you don’t get in an accident within the first years of making this change you will have easily made this money back and more.
Deductible: The amount of out of pocket expense you are expected to pay towards your cars repair if you were to get in an accident.
Buy a Computer
- I believe that every home with a school age child should have a computer and printer. A decent computer can be purchase for around $500.00. The main purpose is for school use. This should not be purchased on credit, save towards a computer. Until then use the public library, some schools offer after school access to computers.
Owning property
- contribute to RRSP save for house down payment. Can use a maximum of 20,000 from RRSP towards your first home.
- Couple can use up to 20,000 each, total $40,000.
This money will have to be put back into your RRSP over a 15 year period starting 2 years after purchasing the house. Using the maximum amount $40,000 works out to be $222.22/mth, so you need to take this into consideration when working out your overall monthly payments. RRSP contributions used that is not paid back will be included as income and you will be tax accordingly. This is if you did not make any of the payments for that year and assuming you used the maximum amount the total would be 12x$222.22 = $2666.67. And if from your employment income you made $30,000 for the year, your total taxable income would be $32666.67.
Expenses to consider when purchasing a home
You first need a down payment, minimum 5% of total cost of home the more the better. Preferably 25% down payment, depending on your age, employment situation 25% may be too much. Along with your down payment there is what is considered closing cost which is usually another 3-5% of the value of the home, this amount is needed.
Eg. If a house cost $275,000.00, 5% of that is 13,750 + an additional $10,000 - $13,750. Total amount required $27,500.
Life insurance
- insure your life for your children. Take out a $50,000 term life insurance.
-
Home Business
- start a small home base business
- tax write-offs
- employ your children , spouse …. Have children start claiming tax, explain taxes/credit to children. With a home base business, you can pay your child/spouse as a sub-contractor to work for you providing the pay is reasonable for the job performed. Now say you pay your child $2666.67, with is below the personal amount of $7000.your child will not be taxed on this money. Your taxable income now goes back to $30,000.
Getting Employed
- get your resume done professionally
- educate yourself in your field of interest
- apply through job agencies
- post resume on job sites
Phone – get the basic phone service with call-waiting, buy an answering machine.
Cable – get the basic cable package. If there is a need for more channels try the MeTv package, considerably more than the basic package but a little cheaper than to Ultimate package. Contact your cable provider and have them send you information on the different packages available.
Building credit
While paying down your debt:
Get a secured credit card if you don’t already have one, or if you don’t qualify for a conventional credit card. You can apply for one on the internet by visiting http://www.capitalone.ca/ click on the ‘Credit Cards’ tab, under the ‘Capitol One Secured MasterCard’ click on button to ‘Apply Now’ …. Complete and submit form.
Within a couple of days you will receive a letter telling you how much you will need to deposit in order to obtain card. Follow instruction provided in the letter.
Again this card is to help you reestablish your credit, use once or twice, pay the bill on time. This card should not be used after the 2nd time.
Discipline is key.
After accumulating savings, some of that money to a guaranteed investment certificate (GIC) with a higher interest rate for a specific period of time. Then, request a small personal loan, secured with your GIC, from your banker.
Equifax Canada
Office: 110 Sheppard Ave. E
Toronto, ON
Office hours: Mon. – Fri. 9am – 4pm
Tel: 1-877-323-2598
For Consumers who want to obtain a copy of their personal credit report:
phone 1 800 465 7166 to request a copy of your report and further information
mail a written request with copies of two pieces of identification to:
Equifax Canada Inc.
Consumer Relations Department
Box 190 Jean Talon Station
Montreal, Quebec
H1S 2Z2
Form can be downloaded from: http://www.equifax.com/EFX_Canada/consumer_information_centre/docs/request_report_form_e.pdf
fax a written request with copies of two pieces of identification to: 514 355 8502
e-mail a request to: consumer.relations@equifax.com
Trans Union Canada
Residents of Canada are entitled to a free copy of their TransUnion Consumer Disclosure Report during each calendar year. This service is available by visiting one of TransUnion's offices across Canada, mailing in a request
If you have had an application denied within the last 60 days and a TransUnion credit report was used in the decision process, you are entitled to discuss your credit file with a TransUnion associate, by dialing 1-800-453-9528. Residents of Quebec, please contact 1-877-713-3393
To obtain a copy of your Consumer Disclosure report from TransUnion –
Telephone 1-800-453-9528
8:00 AM until 8:00 PM EST, Monday to Friday
Or write to:
TransUnion Canada
Consumer Relations Centre
P.O. Box 338, LCD 1
Hamilton, ON
L8L 7W2
Form can be downloaded from: http://www.tuscores.ca/Personal/consumerRelationsForm.jsp?locale=en_CA
Debt Consolidation Loan:
This is the process where one borrows money to pay off all outstanding bills. This is like put all your bills together in one. You now have one balance outstanding, and you make the monthly payment on this. This monthly payment is usually less than what you would have paid if all bills were paid separately.
.
posted by TreNet at 9:02 AM
0 comments
