If you are struggling to meet ends, you are not the only one. Almost every Canadian out there reaches a point in his/her life when this happens. Their bills get ahead of them, making them borrow money, use credit cards, piling themselves under debt, the debt they then are not sure how to pay off, landing them in a world of trouble.
However, Canadians have a number of viable options to choose to get themselves out of debt. Here we will share a few of these options with you, options that millions of Canadians have used to ease their burdens of debt, putting an end to the numerous letters and calls that harass them.
Manage your money better
Money management is a vital tool for getting out of debt. The first step to better money management is creating a budget, listing all of one’s monthly expenses and income. This budget should then be analyzed for room to both lower one’s expenses and raise one’s income. Any cash that is freed up should be utilized to repay one’s debts.
A careful analysis of your expenses usually reveals many unnecessary purchases. These unnecessary purchases and impulsive buying must be eliminated. Once you have paid off your credit cards, you should consider getting rid of the majority of them. You should also rebuild your credit rating, making it possible to get the credit required not only in an easier fashion but also at lower interest rates.
Debt consolidation loans
You can always check if your credit union or bank can help you consolidate all of the debts into a single loan, requiring a single monthly payment at a lowered interest rate. Debt consolidations loans are extremely useful first steps in getting one’s debts paid off. However, you should be careful. Debt consolidation loans are helpful only if you create a budget that accomplishes two tasks, first that you do not build up more debts while still paying for the consolidation loan, and second that your budget allows for certain monthly savings.
The underlying issue with debt is peoples’ tendency to spend a greater amount than they earn. Until this underlying issue is addressed by making savings, debt consolidation loans will be ineffective in the long run. By the time you pay off the debt consolidation loan, you will have racked up an entirely new set of debts.
If you want to take full advantage of a debt consolidation loan, you must keep a handle on your spending, setting some money aside every month, being prepared for emergencies, and ready for unplanned expenses.
Credit counselors and debt management plans
If you have trouble managing your debt, you should see a credit counselor. They can be very useful in negotiating with creditors or setting up a debt management plan.
Orderly Payment of Debts
This only applies to those living in Nova Scotia, Prince Edward Island, Saskatchewan, and Alberta. You can make an agreement with your creditors and Orderly Payment of Debts program, allowing you to make one monthly payment, a payment you can easily afford, at interest rates that have been lowered.
One can use a Licensed Insolvency Trustee to make a consumer proposal, addressed to the creditors, containing set and affordable payments that can be made in five years. This is a good alternative to bankruptcy. Your creditors must accept your proposal within 45 days. Once your proposal is accepted, your creditors cannot take any legal action against you. You usually have to pay less than the original amount in this case, and interest is waived off your debt too. Creditors accept it because it offers them more than if you were to declare bankruptcy.
Bankruptcy is the final solution for people in debt in Canada. Do this only if you cannot pay even a fraction of what you owe. A Licensed Insolvency Trustee will carry it out for you.