When you’re faced with a high amount of debt, you might not know where to turn. You can feel hopeless when you’re staring at a heap of unpaid bills, or receive harassing phone calls from debt collectors. Canadians have record high levels of debt, meaning that more and more people are in this precarious situation. Having a lot of debt can limit your life, cause incredible stress, and even lead to health problems. The good news is that finding debt relief is relatively easy.
With all of the advertisements and commercials and everything else out there, it’s easy to be overwhelmed by debt relief options. Which ones actually work? Which ones are available to you? What is the right choice for your particular financial situation? These overwhelming questions can cause people to give up on finding debt relief. It sometimes even seems easier to do nothing, than to try and figure out what all of the different debt relief options mean.
However, doing nothing does not eliminate your debt. It also puts you in a situation where your creditors could take legal action against you in order to collect their debts. Avoiding your debt causes creditors and collection agencies to keep calling and your debts to grow even higher.
That's why it's always a good idea to consider the debt relief options that are available to you and to make a plan. A good way to find out more about your debt options, is to speak with a certified Trustee in Bankruptcy. Despite the name, this isn’t a person who can only help file for bankruptcy. An insolvency trustee can review your financial situation and provide you with details on the debt relief options that fit your situation.
Speak about Debt Relief with a Licensed Insolvency Trustee
Each person is different, and each financial situation is different. That's why not all debt relief options apply to each person. Speaking with an insolvency trustee can help you figure out which option is best for you. Our insolvency trustees offer a free, no obligation consultation, where they will review your debt issues and let you know which options are available.
The most popular debt relief options are:
- Debt Consolidation
Debt consolidation is a situation where a person takes out a new loan and uses this loan to pay his or her outstanding debts. The goal of this debt consolidation loan is to get a loan that has a lower interest rate than the overall rate of your current debts. This process saves you money on interest charges. However, if you are having financial difficulties and looking for debt relief, you may find it tough to get a loan with a favourable interest rate. It also doesn't decrease your total amount of debt, or can even make it worse.
- Informal Debt Settlement
In this situation, you will contact each of your creditors individually and try to negotiate with them yourself. In most cases, debt settlement negotiations result in paying a lower interest rate, or being given more time to pay off your debt. However, this process involves speaking with each and every creditor individually, which can be time-consuming and difficult. You also may find that some creditors will not be willing to negotiate with you, and the impact on your debt is limited, as the amount of debt is often unaffected.
- Consumer Proposal
In a Consumer Proposal you offer to pay your unsecured creditors less than the total amount owing, over a period of time. At the conclusion of the process, your remaining outstanding debt is discharged. A Consumer Proposal is a legal process that provides you with legal protection from your creditors. Debt collectors will stop calling, and all your debts will be consolidated in one, often substantially lower (up to 70%) debt, with one monthly payment.
In a Bankruptcy, an “honest but unfortunate debtor” is provided with a legal process that allows him or her to eliminate most (if not all) of their debt. It is available to those who are unable to pay their debts as they become due. Bankruptcy can only be filed by a Trustee in Bankruptcy.
It’s important that you always remember that the debt solution you choose is entirely up to you. Insolvency trustees are trained to provide you with your options and assist you when possible. They are bound by a strict code of ethics that ensures that they provide you with information on all available debt relief options, so that you can make an informed decision.
When it comes to debt relief, it makes sense to look at all of the possibilities and use this information to figure out the right choice for yourself.