Let’s face it, money is complicated and managing it can be stressful. Debt and the rising cost of living are a struggle for many Canadians. Inflation has begun to bite in recent months and interest rate rises can make balancing budgets a real challenge.
If you find yourself in financial difficulty in Red Deer, credit counselling can help. A Licensed Insolvency Trustee (LIT) can help you get your finances back on track. Here’s how an LIT can offer you support during this difficult time:
What is a credit counsellor?
LITs are trained counsellors who provide money management advice. If you’re struggling with debt, they can provide both guidance and support, helping you find a way back to financial stability.
They will:
- Review your income, assets, spending plans and regular expenses – plus other financial information such as credit score and reports.
- Help you devise a long debt management and debt repayment strategy, as part of a budget. This might include, for example, an initial focus on higher interest loans, to minimize costs, before moving on to lower interest debt.
- Negotiate with your creditors and try to secure lower interest rates and late fee waivers whenever possible.
- Provide information about Consumer Proposals – an alternative to Bankruptcy.
- Provide guidance on personal Bankruptcy and what to expect if this is a good choice for you.
The services of credit counsellors extend beyond debt counselling to advice on broader financial issues. These include:
- General budgeting and money management – which spending to prioritize in order to stay on top financially.
- Mortgage problems
- Credit cards issues
Alternatives to credit counselling
If your financial situation has become more serious, and counselling alone is not helping to manage your debt, there are other types of debt relief to consider, including:
Consumer Proposal
A Consumer Proposal is effectively a negotiated settlement in which the debtor offers to make monthly payments for a period of time, with the funds distributed amongst their creditors. The maximum period of time over which this can be done is five years.
Creditors are given 45 days to accept or reject a Consumer Proposal. Creditors typically agree if they believe that the person is in genuine financial difficulty but can make payments. The total amount payable may be less than their debts but under a Consumer Proposal creditors will often receive more of the money owed them than they would if the debtor became bankrupt.
If the Consumer Proposal is accepted and ratified by a court, your agreed payments are made each month to an appointed administrator, and your creditors cannot take any further action against you. All credit collections and garnishments stop.
Bankruptcy
Bankruptcy is the legal status of being unable to pay debts that are due. You make a formal declaration and become legally bankrupt for a period of time, before eventually being ‘discharged’ and becoming legally solvent once more. The process follows the guidelines of the Bankruptcy & Insolvency Act.
To file, your debt must be over $1,000 and you are unable to meet your financial obligations. It is a common myth that you lose everything when you file for Bankruptcy. This is not so. Each province has separate exception laws that allow you to keep certain assets.
Bankruptcy is often considered a last resort because this status will have a negative impact on your credit report. But in some circumstances it may be the best option. It eliminates most unsecured debt and allows you to have a fresh financial start.
How a Licensed Insolvency Trustee can help
Trained and regulated by the federal government, Licensed Insolvency Trustees are the only professionals legally able to administer Bankruptcies in Canada. LITs negotiate directly with creditors and assume responsibility for selling your assets and holding the funds in trust, for subsequent distribution to creditors.
LITs are also licensed credit counsellors, who can provide general financial advice, debt counselling and credit consolidation. LITs are legally obligated to ensure that both creditors and debtors are treated fairly.
Looking for credit counselling in Red Deer, AB?
If you live in Red Deer, and are struggling to meet your financial commitments, your go-to-choice for advice and support should be Allan Marshall & Associates Inc. Our LITs are professionals in all areas of debt support, from credit counselling to Bankruptcy offers. Contact us today in our Red Deer office for a free consultation. We can help(™).
