Phone bills can get very expensive, especially in Canada which has some of the highest cell phone bills in the G7. Phone plans can cost a lot of money each month, even if you are not paying a premium to cover the costs of a new phone. However, in instances where you are paying a “device subsidy” to pay for a new device over the course of your contract, this higher rate often stays on your bill even after you’ve paid off the phone. Phone companies use this fact to encourage people to sign new contracts to receive new phones, but the costs of these contracts is often very high. Plans frequently change and different carriers offer different plans, making it tough to comparison shop for the best deal. The result is that many people have debt problems because of old phone bills.
If you’re not able to pay your phone bill when it’s due, the provider typically charges a penalty. They may even charge interest on the outstanding amount, depending on your situation and your company. These penalties make it even more difficult to repay the bill, and the costs can go up every month that you aren’t able to pay your phone bill in its entirety.
So, what can you do if your debt is building up and you have debt problems because of old phone bills?
At first, the situation might seem hopeless, but there are options available.
Handling Phone Bill Debt
There is no “one size fits all” solution when it comes to dealing with debt. The right answer for how to handle these problems is different for everyone. For instance, if you have a long history with a phone company and have typically paid your bills on time, you may wish to call the company and explain your situation. If you recently lost your job or had medical issues, for instance, and are now unable to pay what you owe due to your situation, speaking with the company could help. They might be willing to reduce or eliminate late payment penalties, for instance, so that you will have an easier time paying off your debt.
However, not all companies will agree to modifying the terms of your cell phone contract. They may insist that you pay exactly what you owe, including any penalties or charges.
When you’re struggling with debt, it’s a good idea to look at your budget and see what you can do to reduce the rest of your expenses. If you can cut certain costs, that could leave you with enough money to pay off your old phone bills. Look for areas where you can reduce spending. Some people are able to stop eating out, take public transit instead of driving, or cancel various subscription services and find enough money in their budget to pay their debts.
If you have tried to reduce spending and you’re still not able to find the money to pay your old phone bills, do not despair. There are options available. Speaking with a Licensed Insolvency Trustee can help you understand what you may be able to do to resolve your financial troubles.
Old Phone Bills, Bankruptcy, and Consumer Proposal
Two options that may be available to you are the legal processes known as consumer proposal and bankruptcy. In a consumer proposal, you make an offer to all your unsecured creditors and agree to repay a portion of your debt and have the rest discharged. In a bankruptcy, your unsecured debts can be completely discharged, and you will be given a fresh start. Both options have their benefits as well as potential drawbacks, so you’ll want to have a detailed conversation with a trustee before you decide to proceed with either process.
Old phone bill debt can be included in a bankruptcy or a proposal, but you will likely need to cancel your contract with the phone provider prior to doing so. Phone companies will continue to work with you if you can pay your monthly bills, even if you file for bankruptcy or complete a proposal, but if you wish to include these debts in these legal process, your contract will be terminated. This can result in additional fees and penalties, depending on the terms of the contract that you signed. If you are happy with your phone contract and do not wish to cancel, you will need to find a way to pay your phone bills outside of the proposal or bankruptcy process.
The consumer proposal and bankruptcy processes may still help in these situations, however. If you have other debts (such as credit card debts) that are making it tough for you to pay your phone bill, the bankruptcy or consumer proposal processes can resolve these debt issues, leaving you with enough money to pay your monthly bills and any old phone bill debt you may have. A licensed trustee can help you understand your situation in greater detail so you can make the right financial decision for yourself.