Dealing with Debt
If you are in a large amount of debt, the situation can be very stressful. Dealing with creditors, juggling bill payments and trying to manage expenses can be incredibly tough. It can cause you to lose sleep, feel depressed and lead to a wide variety of different medical conditions. It makes sense then that many people find themselves looking for help with how to pay off debt.
Paying off debt is possible for many people. However, it depends on your particular financial situation. If you are overwhelmed by debt and looking for ways to get out, it makes sense to take a good look at your circumstances and determine if you can realistically pay off your debt.
Tips on How to Pay off Debt
One of the first things you will need to do is understand your debt fully. Take the time to sit down and write a list of all of your debts, from credit card debts and lines of credit to mortgages and automobile loans. Writing everything down on a list can help you get a better picture of how much you actually owe.
Then you’ll want to write down all of the payments that you are expected to make each month. Include your debt payments as well as your other monthly expenses (such as food, utilities, phone bills, etc.) Add this total up. Then compare it to your income. If you’re making more than you owe, you are in a good position where you should be able to pay down your debt as long as you’re disciplined, have a plan and don’t rack up any additional debt. However, if you owe more than you make, you’ll need to see if you can make some changes.
See which expenses you can cut. You won’t be able to reduce things like your mortgage payment or your car loan, but you will likely be able to cut down on things like food, entertainment, clothes, etc. Your job here is to see if you can cut enough unnecessary expenses out of your budget to be able to afford your necessities and your debt payments. If you can do so, good for you! You now have a plan.
Help with Debt Relief
You might find that you simply cannot pay your monthly expenses and your debt payments, no matter how much you try to cut down your expenses. If this is your situation, you may wish to get help with debt relief from a financial professional.
One person that you may wish to speak with is a trustee in bankruptcy. Don’t worry, just because you’re speaking with a trustee it doesn’t mean that you’re going to have to file for bankruptcy. A bankruptcy trustee is a person who has been trained and registered by the federal government to administer consumer proposal and bankruptcy processes. However, a trustee can also review your financial situation and provide you with details on the options available to you that can help you pay off debt or eliminate most (if not all) of your debt.
Most trustees offer the initial consultation at no charge. This means that you can meet with a trustee, have him or her review your situation and inform you of the available debt relief options at no cost to you. It will then be your decision as to how you wish to proceed.
Bankruptcy trustees are required to give you details on all available options, not just those that they offer. These options may include:
- Debt settlement
- Credit counselling
- Debt consolidation
- Filing a consumer proposal
- And potentially other options
Your trustee will explain these options to you, allowing you to make an informed choice for your financial future. If you decide to proceed with filing a consumer proposal or bankruptcy, this must be done with a trustee. The trustee will ensure that you complete and file all required paperwork and administer the entire legal process.
Each financial situation is unique. This means that there is no “one size fits all” option that is the right choice for everyone. Meeting with a trustee and reviewing your financial situation can help you understand the options available and provide you with information on how to pay off debt or eliminate debt.