How Do I Know If I Need Help with My Debts?

Although most Canadians have some form of debt, we don’t always know when we need help managing our finances.

If you’ve found yourself wondering, ‘do I need help with my debts?’, then it’s highly likely you do.

While it’s easy to bury your head in the sand and avoid thinking about mounting debt, this won’t resolve the issue.

With help, however, you can reduce your liabilities, manage your debt more effectively and get back on track faster than you thought possible.

If you’re still unsure about whether to seek help and advice regarding your debts, take the time to really address your financial situation.

If you recognize any of the following five signs, it’s a good indicator that you could use some help managing your debts:

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1. You pay one creditor with credit from another

If you’re repaying one line of credit with another, it’s indicative of a spiralling debt problem.

With interest rates being applied to both forms of credit, chances are your overall debt is simply increasing, despite you making regular payments.

When people get into this spiral, it normally ends when they run out of credit and can’t access any more or when the minimum monthly repayments simply get too high.

At this point, you’ll be unable to manage your debts and be forced to seek more drastic solutions to resolve your financial issues.

2. You avoid communication from creditors

If you ignore the post that’s pilling up in your mailbox or you let your phone go to voicemail when an unrecognized number flashes up on the screen, it could be a sign that you’re trying to avoid your financial issues.

Although talking to your creditors is the first step in dealing with debt problems, many people do the exact opposite when they first start experiencing financial issues.

Unfortunately, this can cause problems to worsen and could lead to your account being subject to charges, higher interest rates and, ultimately, legal action.

3. You’re making minimum payments

A low monthly minimum repayment might seem like a great idea to begin with, but you’ll soon realize that it’s a fast way to get into a whole heap of debt.

Often, the interest that’s being applied to your account will be higher than the minimum monthly payment.

That means that your overall debt will be increasing, even if you never miss a payment.

Of course, with this repayment strategy, you’ll never actually be able to pay the debt off.

Instead, it will continue to increase, and, in most instances, your monthly minimum repayment will be increased too.

When this happens with multiple forms of credit, it doesn’t take long for your minimum payments to exceed your available income, so don’t be surprised if a debt crisis is looming.

4. Having no savings

If you have a significant amount of debt, there’s a good chance you don’t have any savings on standby.

With the majority of your funds going towards paying your creditors every month, it’s not surprising that you don’t have any extra to put by for a rainy day.

When you’re unable to save, however, it also means that you can’t prepare for any emergencies.

If you’re hit by an unforeseen bill or increased essential expenditure, you’ll have no way to fund these additional costs.

You may even attempt to obtain more credit to deal with an unexpected financial requirement, which could lead to further problems down the line.

If you don’t have access to savings for urgent situations, you may be more tempted to use alternative lenders, such as payday loan providers.

Inevitably, this means even higher interest rates, so your debt problems are likely to worsen.

5. You don’t have a budget

If you don’t have a budget or you regularly exceed your budget, it’s hard to find your way out of debt.

Whether you’re miscalculating the amount you spend or you’re simply not accounting for all of your essential costs, it’s vital to take another look at your finances and work out a budget that’s viable.

If your outgoings greatly exceed your income, there’s no need to panic.

Creating an accurate budget is often the first step to addressing your financial issues and resolving your debts, so don’t despair.

Instead, seek advice regarding your debts and find out how you reduce the amount you owe, safeguard your assets and protect your finances.

Accessing Debt Solutions

Although many people delay seeking assistance with their debts, it can be a great weight off your mind when you do finally accept help.

It’s not unusual for people to feel embarrassed or even ashamed about having a large amount of debt but there really is no need to feel this way.

The vast majority of Canadians have some form of debt and a surprisingly high number of people are struggling with their finances in the same way you are.

By seeking advice from a reputable resource, you can ensure that you’re managing your finances effectively and reducing your debts at the same time.

There are many types of debt solutions available, so you’ll want to find out more about all of them before you decide what’s right for you.

Credit counselling could help you to create a budget and provide the assistance you need to approach your creditors regarding a payment reduction, for example.

Alternatively, a consumer proposal could help you to eradicate up to 75% of your total debts and prevent interest from being added to the remaining amount.

To learn more about the debt solutions that are available to you, talk to Bankruptcy Canada today.

With more than 20 years’ experience in the industry, we’ve got the experience and expertise you need to help you move forward and leave your debts behind.

Call us now on (877) 879-4770 and talk to a friendly member of our team in confidence today.

Information on Consumer Proposals

Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
How to Amend a Consumer Proposal
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
Consumer Proposal Eligibility
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?

Canadian Bankruptcies

How to File for Bankruptcy
What is Bankruptcy?
Bankruptcy FAQs
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

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