Do you feel like your never-ending debt is running your life?
Many times, we end up in debt fully intending that it will be temporary, and we’ll pay the loan back as soon as we can. And then life happens.
Feeling like you have never-ending debt can lead to feelings of anger, denial, and even depression. When you have this much debt, it feels like your finances are out of your control. You’re forced to give every extra dollar you have to your creditors rather than buying what you need and want or saving for your future.
The good news is there are many ways to reduce debt.
There are options available to help you regain control over your finances. By recognizing that you need help with your finances and learning about the options available to you, you are taking a big step towards regaining control of your financial decisions.
Ask for help
The first step in reducing your debt is to realize you need help.
Sometimes family members and friends are eager to offer their support and have the financial means to pay some or all your debt for you. But this is only a temporary fix. Now your family member or friend has become one of your creditors. This can put a strain on your relationships.
This is where a Licensed Insolvency Trustee (LIT) comes in. An LIT can look at your finances and help you determine the best course of action for your specific situation.
Many people try and fix their financial problems on their own, waiting as long as possible to contact an LIT. It’s much better to contact an LIT as soon as possible. An LIT can help you find the right solution to your financial problems.
Understand your options
There’s no charge to meet with an LIT and learn how they can help you. The LIT will look at the amount of debt you have and go over your finances in detail. Once they have a clear picture of your situation, they can recommend various options.
You may be wondering how LITs get paid if they are providing advice for free. Their fees are paid from the payments made by you to your creditors in a bankruptcy or Consumer Proposal.
Options to consider when trying to improve your financial situation include credit counselling, Consumer Proposals, and bankruptcy.
Try credit counselling
Credit counselling can help you find solutions to your never ending debt problems. You must research this carefully because credit counsellors in Canada aren’t required to meet any specific educational requirements.
Credit counselling agencies can be non-profit as well as fee-based so make sure you understand how the credit counsellor is getting paid before you agree to work with them.
Because credit counsellors aren’t licensed, they cannot provide legal protection against your creditors. Even though you may have a debt management plan in place through a credit counsellor, your creditors can still do things like garnish your wages.
Licensed Insolvency Trustees also offer credit counselling and can help you create a debt management plan. This can involve making payments to the agency that they then pass along to your creditors. In this type of arrangement, called a consolidation, you are substituting multiple payments for one monthly payment.
Licensed Insolvency Trustees are regulated by the government of Canada, so you know you’ll be receiving a quality solution for your financial problems when you work with an LIT.
In this podcast, our Licensed Insolvency Trustee, Mark Marshall, delves into Bankruptcy and Consumer Proposals, two of the insolvency options mentioned below. Mark goes through the similarities and the differences between the two, and how both are able to resolve debt problems and provide legal protection from creditors.
Improve your finances with a Consumer Proposal
A Consumer Proposal is a legally binding agreement where your LIT negotiates with your creditors on your behalf. The negotiation will result in you paying only a portion of the debt you owe while the remainder is wiped out.
How much of your debt you end up re-paying depends on the agreement your LIT reaches with your creditors.
When you file a Consumer Proposal you put a stop to your mounting debt payments, and you become protected from your creditors.
A Consumer Proposal can help you take back control of your debt payments, allowing you to repay a portion of what you owe. This effectively stops the never-ending debt cycle.
Get relief by claiming bankruptcy
Like a Consumer Proposal, filing for bankruptcy is a legal proceeding. Only an LIT can help you file for bankruptcy. The LIT you choose will guide you through the process and explain every step.
To file for bankruptcy, you will need to provide a list of all your creditors as well as a list of any assets you own. Once the bankruptcy has been filed, your creditors cannot take actions like garnishing your wages.
A bankruptcy officially stops the cycle of never-ending debt. It takes about nine months which means, after filing for bankruptcy, all your debts will be cancelled after nine months, and you can start rebuilding your credit.
You will be required to attend financial counselling sessions with your LIT, and the bankruptcy will stay on your credit report for six years after the discharge date.
Stop the never-ending cycle of debt
The never-ending cycle of debt can be stressful, but there are options available to you to put an end to it.
You may seek advice from family and friends or credit counsellors, but a Licensed Insolvency Trustee is the only one who can legally put an end to your debt problems. Licensed by the Superintendent of Bankruptcy in Canada, LITs are the most highly trained debt consultants in Canada.
Once you stop the habit of going further and further in debt, you can start to rebuild your credit and even start saving for some of those fun things you’ve been wanting to buy.
If you are struggling with a never-ending cycle of debt, we can help you decide how to stop it. 1 (888) 371-8900. Contact us today.