Debt Relief Options: How To Get Out Of Debt
The Best Ways To Get Debt Relief in Canada
There are a number of organizations that offer plans to help you manage your debts. Of course, searching out the best solution for your debt relief needs is essential, so you can deal with your debt pressures in the most expedient way possible.
There are five main options how to get out of debt:
- Debt Consolidation Loans
- Credit Counsellor vs Insolvency Trustee
- Consumer Proposal
- Do nothing
This last option of doing nothing may only make sense if you have no assets (house, car, etc.) and no income from employment. If this is the case, there is nothing for your creditors to go after to help pay down your debts, so you could decide to wait it out..
However, doing nothing does not eliminate your debts and also leaves open the possibility that your creditors will pursue you if and when your employment or financial circumstances change. And it will not stop the harassment (including those harassing telephone calls and nasty letters).
We can assist you in finding the best solution for you to solve your debts problems and get a fresh financial start. Request a call-back to schedule a free, no-obligation consultation.
You're Not The Only One In Debt
Canadians have a lot of debt. In fact, debt levels reach a record high almost every single year. Most recently, Statistics Canada showed that the household debt-to-disposable income ratio has hit a record 163%. What does this mean? It means that, for every dollar of disposable income that the average Canadian made in the last year, they had $1.63 in credit market debt. Credit market debt includes consumer credit, mortgage and non-mortgage loans. The average debt held by Canadians, excluding mortgage debt, increased by 2.9% in the last year to $20,967.
So how do you know when you have too much debt? How do you know when you need debt relief help? Every person is different, but here are a few signs that you may have too much debt and need assistance.
Signs that You May Have Too Much Debt
As mentioned, every debt problem is different. However, if any of these signs apply to you, you should at least consider reviewing your finances and seriously consider if your debt load is too high.
You don’t know how much you owe
Do you have so much debt that you can’t keep track of it? Are you avoiding dealing with debt by ignoring it and hiding from it? If you are, you can’t hide forever. Your debt will come back to haunt you and your creditors will come after you for unpaid debt.
You hide your spending or debt
If you’re hiding your spending habits or how much debt you have from your loved ones, it’s likely because you know you’re in trouble and you don’t want anyone else to find out.
You’re unable to pay your bills regularly
Are you unable to pay your monthly bills? Do you find yourself missing payments or making payments late because you don’t have the money? If so, you could have too much debt. Debt relief help could put you back on track.
Your debt stresses you out
High amounts of debt are incredibly stressful. If you’re worried about your debt, unable to sleep at night due to debt concerns or you can’t focus because of the stress of your debt, you probably need help with debt relief.
You can only afford minimum payments
Paying only the minimum payments on your credit cards is costly and the interest on these debts quickly adds up over time. If you can’t afford to pay more than the minimum, you probably have too much debt.
You’re borrowing money to pay your bills
If you’re in a situation where you can’t make your regular bill payments without borrowing more money, you have too much debt and need debt relief help. While you might be currently getting by with lines of credit, credit cards, payday loans and borrowing from friends and family, you’ll eventually run out of places to borrow from.
You have nothing left over at the end of the month
If too much of your income is going towards paying your bills and your debt, and you have no money left for savings or an emergency fund, you could have too much debt.
You get calls from creditors
Calls from creditors are stressful, annoying and can lead to a variety of health and well-being issues. If you’re getting calls from creditors due to missed payments, late payments or for any other reasons, you are having trouble handling your debts and likely need a debt relief solution.
Do these situations sound like you? Are you feeling the crunch of high levels of debt? If you are, it can sometimes feel like there is no hope. You might be tempted to bury your head in the sand and resign yourself to a life of high debt levels and financial stress. However, it doesn’t have to be that way. Living debt free is possible and rebuilding your financial life can be done.
One of the first steps is to recognize your situation. If you’ve realized that you’re in debt trouble and need help, you’ll then want to consider speaking to a financial professional. For example, sitting down with a trustee in bankruptcy can help you get a better understanding of your debt situation and allow you to understand how to reduce debt with the the debt management program.
Dealing with Debt
Debt can be stressful and lead to a variety of different medical conditions. It can also damage your credit rating and make it more difficult for you to manage your financial life. Having a lot of debt makes it difficult to handle life’s issues. For example, if you’re already struggling to pay your existing debt, what happens if you lose your job or are stuck with an unexpected car repair bill?
If you are having trouble handling your debt, it makes sense to speak with a debt relief professional.
One person who can help you understand the debt relief options available to you is an Insolvency Trustee. Speaking with an Insolvency Trustee does not mean that you will end up filing for bankruptcy. An Insolvency Trustee is someone who is registered and licensed by the federal government to review financial situations and inform people of all the debt relief options that are available to them.
Trustees are bound by a strict code of ethics. They are required to inform you of all of your options, not just those that they can help you with. This is different than other types of financial professionals, who may only be able to tell you about one or two different options.
In addition, Licensed Insolvency Trustees are obliged to offer free consultations. This means that you can sit down with an Insolvency Trustee and have him or her review your situation at no cost to you. The Trustee will let you know which debt relief options are possible for you. This information will allow you to make an informed choice for yourself and drastically improve your financial future.
Some options that your trustee may inform you of include:
- Debt Consolidation
- Credit Counselling
- Consumer Proposal
Each individual financial situation is different. Therefore, different financial solutions work better for different people. Once you understand the options available, you can choose the one that will help you to get out of debt fast.
You can trust our team to never push you into choosing one option or another. The way you proceed is always your choice. We fully understand how stressful and emotional debt situations can be. We have a long history of dealing with debt, and always promise to be professional and respectful when working with our clients. It is our goal to help guide you through your personal debt relief process.
What is a Consumer Proposal?
A Consumer Proposal is a situation where you make an offer to your unsecured creditors that will see you repay them on terms that you can afford. In most cases, you will offer to pay a portion of your debts in monthly payments over a specific period of time. Once you have made all of the agreed-upon payments, your remaining outstanding debts will be forgiven.
A Consumer Proposal is a legal process that must be filed with a Licensed Insolvency Trustee, who will act as the proposal administrator. If you choose to proceed with this debt relief option, the Trustee will determine what a fair offer to your creditors will be. This offer will be sent to all of your unsecured creditors who will then vote on whether or not to accept the proposal. If the majority of your creditors vote to accept your Consumer Proposal, all are bound by its terms.
If you wish to find out more about the consumer proposal process, speak to an Insolvency Trustee, or read more about Consumer Proposals here.
What is a Bankruptcy?
Bankruptcy is also a legal process that is administered by a Licensed Insolvency Trustee. The bankruptcy process provides honest yet unfortunate debtors with an opportunity to eliminate most, if not all, of their debts and make a fresh financial start - without debt.
Despite what some people may believe, the goal of the bankruptcy process is not to punish you and leave you with nothing. Instead, bankruptcy is designed to put you in a position where you can rebuild your financial life.
For more information on bankruptcy, read our Bankruptcy section and speak with a Licensed Insolvency Trustee.
For a free consultation with an Insolvency Trustee, please schedule a free debt relief consultation using the form below.