5 Strategies for Achieving Financial Freedom: Your Guide to Manitoba Debt Assistance
Financial debt is a challenge that many people face and often, help is needed to overcome it. If you find yourself grappling with financial burdens, remember, you are not alone. Whether you are still dealing with the aftermath of a festive season splurge, or unexpected expenses such as home repairs or medical bills, it can be overwhelming.
This guide is your beacon to navigate your way out of financial debt. It details five strategies to get Manitoba debt help, their advantages, and potential drawbacks for you to consider.
1. Personal Debt Reduction
The first strategy involves reducing your debt on your own. If you believe that your debt is manageable, you can devise a plan to pay it off. There are numerous free online resources like budgeting worksheets and debt calculators that you may find useful.
Seeing your income and expenses clearly can help you understand where you can make cuts. However, this may not be a feasible option if your financial literacy is limited or if your debt has spiraled out of control. In such cases, external help may be necessary to address the debt crisis.
2. Borrowing from Acquaintances
Another strategy is to borrow money from friends or family. This approach depends on the amount of debt you have and the sum your contacts can lend. However, mixing personal relationships and money can lead to strains and may even break ties. Unless the money is given as a gift, this option may not be beneficial in the long run.
3. Enrolling in a Debt Management Plan
The next strategy involves enrolling in a debt management plan. Credit counselling agencies can help negotiate your debts with your creditors for a fee. Although you will still have to pay the whole amount, the creditors might agree to lower the interest rate or extend the repayment period.
However, this option is not legally binding and relies on your creditor’s willingness to participate. If you cannot repay your entire debt, this option may not be viable. Moreover, the industry is largely unregulated, and some agencies make unrealistic promises, leaving people in a worse situation than before.
4. Debt Settlement Negotiation
There are companies that negotiate debt settlements for less than what you owe. These companies hold your monthly payments in an account until they accumulate a lump sum to settle your debt with a particular creditor. However, this strategy can severely affect your credit score because you are not making any direct payments to your creditors.
Remember, the individuals offering these services may not have formal education or credentials and often charge fees upfront.
5. Consulting a Licensed Insolvency Trustee
Finally, the most effective way to achieve financial freedom might be to consult a Licensed Insolvency Trustee (LIT). LITs are licensed and regulated by the Canadian government and are required to abide by strict rules. They offer a range of services, from budgeting and financial counselling to advising on debt consolidation, consumer proposals, and bankruptcy.
Consumer Proposals and Bankruptcy
LITs are the only professionals authorized by the Canadian government to assist with Consumer Proposals and bankruptcies.
A Consumer Proposal is designed for those who want to repay their debts but cannot do so in full or need an extended timeline. If accepted, you may pay back only a portion of the debt you owe over a period of time, up to five years.
On the other hand, bankruptcy allows for the extinguishment of certain debts, typically within nine months if it’s your first bankruptcy. Most of your assets will be protected, and if you have more income than deemed necessary by the Canadian government for a family your size, you will be expected to pay half of the excess income to your LIT for the benefit of your creditors.
What’s great about these two options is that they provide immediate financial relief. The moment you file a Consumer Proposal or bankruptcy, an automatic Stay of Proceedings takes place. This means your creditors must not contact you directly to recover the debts you owe, offering you protection from collection calls, wage garnishments, frozen bank accounts, and lawsuits.
Seek the Debt Assistance You Need Today
Embarking on your journey to financial freedom today can set the stage for a healthier financial future. The sooner you seek help, the more options you may have.
At Bankruptcy Canada, we are committed to helping you achieve the best financial health possible. Our experienced team will review your financial circumstances and explain each debt relief option available to you, providing advice on the best path for you and your family.
