4 Debt Services Canadians Can Utilize to Help with Their Debt

October 27th, 2021
4 Debt Services Canadians Can Utilize to Help with Their Debt

Everyone’s financial situation can get rough at times. And sometimes, it can lead to a mountain of debt that seems impossible to overcome. But with the right help, you can get past your debt problems and move toward a more financially stable future. When overwhelmed with debt, you can take advantage of the following services to help you get out of a sticky situation.

1. Debt Settlement

When youre having trouble paying your debt, one of the options that you have is that you can go to a debt settlement company for help. Sometimes they can negotiate with your creditors to help you deal with the situation. This often includes proposing a lump sum payment in exchange for debt elimination. And usually, the amount the debt settlement company proposes is lower than what you actually owe your creditors. 

If the creditor(s) agree with the settlement, youll have to provide the lump sum to the debt settlement company. They will forward the funds to the creditor in exchange for the settlement of the outstanding debt.  

However, for this to work, youll need to already have saved up the lump sum amount before an offer can be made. This can prove to be difficult when you are still juggling with debt. If you dont think youll be able to save up that much money, there are still other options you can try to help with your debt situation. 

Always remember to make sure that the settlement you are offering is in full satisfaction of the debt and get it in writing. You don’t want the creditor or their agents to accept the funds and then argue it was just a payment on your outstanding account and then they continue to request further payments from you. 

As an alternative to struggling with debt settlement companies or individuals promising to reduce your debt for a fee, a Licensed Insolvency Trustee will apply experience and knowledge of the Bankruptcy and Insolvency Act to assess your situation and provide you with options to begin a fresh start.

2. Credit Counselling

There are two types of credit counselling that is available to debtors; credit counselling from a Licensed Insolvency Trustee and credit counselling from credit counselling companies. When you have no idea what to do, it would be best to seek advice from someone who does and contact a Licensed Insolvency Trustee.  With credit counselling, youll be able to discuss your financial situation with a credit counsellor who can offer you some solutions and debt management strategies.

Through a Licensed Insolvency Trustee, the counselling is required by the Bankruptcy and Insolvency Act and is provided to help you regain control of your finances and help support you getting back on track financially. The counsellor will provide advice and information regarding the following issues: money management, spending and shopping habits, warning signs of financial difficulties, and obtaining and using credit. 

Through a credit counselling company, they can develop a debt management plan for you as a way to consolidate your debts. By contacting your creditors on your behalf, they may be able to negotiate for a reduction or elimination of interest rates or ask for an extension. This debt management program usually takes 5 years and all parties have to participate voluntarily. A credit counsellor may also offer tips on setting financial goals, budgeting, and using credit and debit properly. 

3. Debt Consolidation

You may also consider getting a debt consolidation loan. This type of personal loan can allow you to combine and pay off multiple debts through one loan payment. Debt consolidation may help make debt repayment easier and more manageable for you. This way, you no longer have to juggle multiple loans from different lenders. It also decreases the chances of forgetting to make a payment since it streamlines the process into a single loan payment each month. However, qualifying for a consolidation loan can be  difficult due to the restrictions imposed by the lender. Often lenders will require that you involve a co-signer to guarantee the loan, or the lender will ask you to pledge assets (i.e., cars, property) as security in case you default on the loan.

4. Bankruptcy

Bankruptcy may seem scary, but sometimes, it can be your best option. This is a legal process that can eliminate your unsecured debt, allowing you a fresh start. A bankruptcy is a process that eliminates your debts in exchange for the liquidation of assets that are not protected or exempt from seizure. However, for most people, they never lose anything at all because their assets are protected and exempt from seizure.  

Make sure you contact a Licensed Insolvency Trustee to review the process and see if this option would work best for you. 

5. Consumer Proposals

A proposal is the creation of a new legally binding contract or arrangement between a debtor and their unsecured creditors. This allows you to restructure or reorganize your debts, and should translate into a greater recovery for all stakeholders than if a bankruptcy were to occur.

A proposal is often helpful for individuals or a business if you need to buy time, reduce your overall debt, break leases, make alternative payment arrangement or compromise taxes.   

It’s usually a request to for an extension of time and to settle the debt for a percentage of what you owe them. Or sometimes a proposal will just ask for more time to pay the debt off in full, because your high value assets cannot be easily sold or liquidated, but you do have them.  

A licensed Insolvency Trustee can help you determine if a consumer proposal is right for you.

Final Thoughts

Debt can be overwhelming at times, but you dont have to deal with it all on your own. Often you can rely on the advice and options of a professional to step in and help you out. They can determine which option is best for you and provide information to help you move forward and start anew. 

Make a fresh financial start possible with the help of Paul J. Pickering and Associates. If you want to review your options and learn about consolidation loans, debt management programs, credit counselling, proposals, consumer proposals and bankruptcies, we at Paul J. Pickering and Associates are here to help you. We have over 30 years of experience in helping our clients resolve their financial problems. Let’s discuss the right plan for you.  Get a free consultation today!