#FinancialFridays: The Danger Signs of Debt
Most of us face a financial crisis at some time in our lives. And where as many problems are relatively easy to solve, others may need professional assistance. The best way to start dealing with your financial problems is to admit to them, take responsibility and take control before they get out of hand.
The Government of Canada lists a number of indicators which may suggest that you have a debt problem which include:
1) Continually going over your spending limit or using your credit cards or overdraft as a necessity rather than a convenience.
2) Always borrowing money to make it from one payday to the next or accessing Pay Day loans on a regular basis.
3) Your wages have been garnished to pay for outstanding debts.
4) You pay only interest or monthly service charges and do not reduce your total debt over many months.
5) You are being pressured by creditors or collection agencies for payment.
6) Companies such as phone, cable, utilities, etc have cut off service because past bills are unpaid.
Having debt can be a very overwhelming experience but there are solutions and there is hope. It is very important not to ignore your debts.
Possible solutions include:
1) Contact your creditors. Explain why you can’t make your payments and suggest making lower payments over a longer period of time. Many creditors will be willing to work with you and accept a payment arrangement.
2) Credit counselling. If you are having a difficulty paying your bills or sticking to your budget, counselling may help. Call 211 to find out if there is an accredited Credit Counsellor near you.
3) Debt Consolidation Loan. You can ask a bank or financial institution about combining or “consolidating” your debts into one loan. Many people find dealing with one loan payment only much easier to manage. Make sure you shop around to find the best interest rate possible.
4) Consumer Proposal. Under the Bankruptcy and Insolvency Act, you may make a Consumer Proposal to your creditors to reduce the amount of your debits, extend the time you have to pay the debts or provide a combination of both.
5) Bankruptcy. In none of the above methods solves your debt problem. Bankruptcy should be a last resort if you cannot meet your financial demands through affordable payments. Bankruptcy is a legal process and because of your inability to pay your debts, you assign your assets (except those exempt by law) to a licensed trustee in Bankruptcy. This process relieves you of most debts and legal proceedings against you by creditors and allows you to have a fresh financial start.
Most importantly, don’t give up. Hope for a brighter financial future does exist.
For more information about debt solutions, consumer proposals or bankruptcy, visit:
Note: The above information is not intended to be financial or legal advice. If you are experiencing financial difficulties, we recommend you speak with a professional to discuss your situation.
Information Source: Government of Canada – Office of the Superintendent of Bankruptcy