Millennials tend to wait longer to buy their first home.
Therefore, it’s not uncommon for them to rent out properties for longer.
However, Millennials who struggle with debt have other considerations.
They don’t think about buying a home.
Instead, they hope to be able to pay the rent at the end of the month.
When debts get out of control, they don’t just jeopardize your future.
They put your everyday life at risk too.
Here’s how a consumer debt proposal makes rent affordable again for a working professional.
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The Millennial debt situation
It is fair to say that for Millennials, debts have become part of everyday life.
Indeed, for a lot of young adults who have joined the workforce, the income they earn is not sufficient to tackle the debt.
How does it happen?
Let’s consider Kevin, a young construction site worker earning $3,500 per month.
His salary reflects his career position.
His current earning potential is too low to cover his commuting costs, insurance emergency bills, living costs, and debt repayments, and rent.
Millennial debt is the result of high costs accumulating over a short period of time for young adults.
Additionally, Millennials often start their professional life with existing debts, such as their student loans or their first car loan, for instance.
Existing debts can force Millennials, such as Kevin, to rely on credit cards for essential expenses.
The process creates a vicious cycle of debt.
The point of no return in debt
Kevin has both secured and unsecured debts.
He purchased his professional truck with a secured loan.
He also has approximately $50,000 in unsecured debts.
Unfortunately, with no asset that can be sold for repayment, he has no way of getting out of debt without restructuring his finances.
He isn’t eligible for a debt consolidation loan due to his high credit utilization.
When Kevin reaches out to a trustee, he believes that personal bankruptcy is the only option because he can’t afford to pay off his debts.
A consumer proposal can restructure your payments
At this point in his career and financial journey, the trustee doesn’t think that bankruptcy is a viable option.
While it would allow him to keep his tool of the trade, the bankruptcy wouldn’t help Kevin get a fresh start.
Instead, the trustee suggests restructuring Kevin’s payments via a consumer proposal.
The first step is to reduce his secured debt.
He could make a deal with the lender and surrender the truck to find a cheaper alternative.
Or he could reach out to his employer for an allowance that would cover some of the cost.
In this instance, the employer agrees to assume the totality of the loan, freeing Kevin’s from some of his debts.
With the consumer proposal, the trustee negotiates a debt reduction with the creditors.
Instead of $50,000, Kevin will only need to repay $16,500 over 60 months.
The unsecured debt has been reduced by 67%, providing Kevin with the financial breathing room he needs to afford his rent and prepare his financial future.
If, like Kevin, you find yourself in a situation where there’s not enough money for the rent, it’s time to reach out to a trustee and discuss debt relief options.
A consumer proposal could give you the fresh start you need— call (877) 879-4770 to book an appointment.
Information on Consumer Proposals
Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
Consumer Proposal Eligibility
How to Amend a Consumer Proposal