Paying down debt can be tough. It’s significantly easier to get into debt than it is to get out of it. Make a few extra purchases on your credit card, go out to dinner with friends a few too many times, take a trip that you can’t pay for in full and you could find yourself having difficulty paying your bills. Then, suppose your car breaks down and you need to spend a thousand dollars to repair it, or your child gets sick and you need to take an unpaid week off work to stay home with him. All of these little situations add up quickly and they can leave you searching for debt relief.
Paying down debt once you have a lot of it can be tough. This is especially true for credit card debt and other debts that have high interest rates. The higher the interest rate, the more you’ll find yourself owing every month and the faster your debt will grow. This is especially true if you’re only able to make the minimum payments. You’ll very quickly find that the overall amount that you owe doesn’t really decrease for a very long time, despite you making payments each month. In fact, you could even find that it goes up for a while before it starts going down! Canadians have record high levels of debt. Statistics Canada figures show that household debt-to-disposable income rose to 163.3 per cent. This means that, on average, Canadian households held $1.63 in credit card debt for every dollar of disposable income they made in the last year. This shows that most people are relying on credit (such as credit cards and lines of credit) to manage their monthly expenses.
Debt Relief Help Options
If you’re in debt, it may feel hopeless. But it doesn’t have to feel that way. There are debt relief help options available that can get you out of debt and back on the path to a strong financial life.
Debt can be stressful. It’s exhausting trying to figure out where your payments are going to come from each month. It’s tough dealing with calls from creditors and collection agencies. It’s difficult to find to ways to afford your monthly expenses while dealing with debt. High amounts of debt lead to stress, anxiety and even depression. However, the good news is that there is debt relief help available. In fact, there are several debt relief options out there, but not all of them will be right for everyone. This is why it makes sense to speak to a financial professional in order to determine what each of these options are. The more information you have, the more likely you are to make the right choice for your particular situation. An informed choice can help you get out of debt and repair your financial life. A Licensed Insolvency Trustee is a financial professional that can help you. Licensed Insolvency trustees are trained, licensed and regulated by the federal government. They are able to sit down with you, review your financial situation and let you know what your options for debt relief are. Once you have more information on the options, you’ll be able to make a choice that works for you.
Debt Relief Options Include:
- Debt Settlement
Debt settlement is an informal situation where you speak to each of your creditors and try to negotiate with them. You may be able to lower the overall interest rate that you owe or reduce the amount that is owed. However, each creditor needs to agree to debt settlement and those who do not agree can still take legal action against you to collect their debts.
- Debt Consolidation
With debt consolidation, a person tries to get a new loan with a lower overall interest rate than their outstanding loans. This can save you money in interest payments if successful. However, if you are in a tough financial situation, you may not be able to get a loan with a favourable interest rate.
- Consumer Proposal
In a consumer proposal, you submit a formal offer through a trustee to all of your unsecured creditors. This offer will see you pay back less than you owe in exchange for having the rest of your debts discharged. If the majority of your creditors accept your proposal, all are bound by its terms. In addition, once a proposal is accepted, your creditors cannot take any legal action against you to collect their debts.
Bankruptcy is a legal process where a debtor who cannot meet his or her financial commitments as they become due is given an opportunity to eliminate their outstanding debt through the bankruptcy process. You also receive protection from your creditors when filing for bankruptcy. As you can see, there are many debt relief options available. By speaking with a trustee, you can find out more about these options and choose the one that works best for you and your situation.