What debt management options are available to me?
There are 4 basic options when you have trouble paying your bills;
Deal with the debt on your own
You might have assets you could sell or investments you could cash in to pay off creditors. Or perhaps you need to make a payment plan.This includes carefully listing of all your basic living expenses but leaving out debt payment except for payments on your mortgage if you own your residence and vehicle payments if that vehicle is necessary for work.
This is your living expense budget.
If there is money left over after living expenses, compare this monthly surplus to your total debt.
Is the monthly surplus sufficient to pay off the debt over a reasonable period of time?
For instance; if your total debt is $10,000 and you have $500 left over each month, you should be able to pay off the debt in about 2 years.
To accomplish this, you need to stick to your budget!
Contact a Credit Counsellor about a Debt Repayment Plan
Maybe you owe too much to be able to deal with the debt on your own.
Good Credit Counsellors can assist you in setting a budget and negotiating with your creditors. A reduction in interest is potentially available. Again, there must be sufficient monthly surplus to pay off your debt. Typically the repayment period is 3 to 5 years at the most.
Contact a Licensed Insolvency Trustee about a Consumer Proposal
If you can’t deal with the debt on your own and you don’t have enough surplus income for a debt repayment plan, a Consumer Proposal is an option. A Consumer Proposal is designed to offer creditors a settlement amount, usually, a fraction of what they are owed, paid in monthly installments without interest.
This option is a legal process that allows you to deal with all of your unsecured debt where the creditors get to vote on accepting your offer with the majority deciding for all creditors.
Contact a Licensed Insolvency Trustee about Bankruptcy
If you cannot afford a Consumer Proposal you can consider bankruptcy. Bankruptcy is a last resort if none of the other options are practical. This would be the case where your debts are so large that whatever you could offer in a Consumer Proposal would have little benefit for creditors, you have no surplus income after covering your basic living expenses, or no other way to raise enough funds to offer a Consumer Proposal. Only Licensed Insolvency trustees to have the authority to administrate a Bankruptcy.