How to Pay Down a Massive Debt

Paying Down Your Massive Debt Loads

Debt usually sneaks up slowly.

Usually, if consumers are aware that debt will be difficult or impossible to pay off in the long term, they will look for another way.

However, in the majority of situations, this is not the case.

Typically, debt is taken out with good intentions, by an employed person with reasonable expenses who later on, experiences an unforeseen circumstance causing debt to no longer be manageable.

Other situations are when due to lack of information or debt traps, more debt is required to pay off the existing debt.

This can quickly snowball into a situation which cannot be surmounted without extreme measures.

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Defining Massive Debt

When it comes down to brass tacks, massive debt is about more than the feelings related to debt.

Typically, when loans or lines of credit are calculated, such is done with consideration to the debt to income ratio.

For instance, if the annual income is $50,000 and your debt is $25,000, you have a 50% debt to income ratio.

There are fixed standards, depending on your jurisdiction to allow new debt to occur.

This means that, if you do not have sufficient income relative to your requested loan, you will be denied.

However, in situations such as loss of employment or sudden expenses, you can find yourself in precarious financial circumstances.

When your debt exceeds 40% of your annual income, you are considered as having massive debt.

It is less a matter of the gross amount of debt you have, rather the amount you make every year and the pragmatism of paying down the debt in a reasonable manner.

If you find yourself in a state of massive debt, it is important to reassess your situation and come up with a viable financial plan to accommodate both your living expenses and your financial future.

Debt Traps (payday loans, bad credit cards)

The first thing is to be financially savvy and aware of the common pitfalls which only serve to worsen your situation.

By being conscious of these risks, you are in the best possible position to make good decisions and avoid problem situations.

Such matters include:


  • ‘Robbing Peter to pay Paul’: This common expression refers to the act of taking out a new debt in efforts to pay off existing debt. Often, consumers opt for this quick fix solution in situations where their bills go to collections. However, if you do not have the funds to pay off existing debt, it is not a good idea to get new debt streams.


  • Payday loans: Though more know of the risk now, these high interest, short term loans are seemingly innocent yet cause matters to escalate quickly. Many get trapped in the vicious cycle of constantly taking out payday loans. It seldom helps consumers get ahead, instead causing increased stress and debt over time.


  • High interest credit cards: While these cards are a viable way of rebuilding credit, if you can only pay minimum monthly amounts, they are a much less suitable solution. The compound interest stacks up quickly and will rapidly contribute to an unhealthy climate financially.


If you are experiencing challenges financially and are either in the midst of or are considering these options as a monetary solution, then consider taking other steps first to protect your interests.

Initial Steps to Take 

Just like a spring cleaning, the first step in managing your debt and finances is to take a full inventory of your entire situation.

Ensure that you are fully aware of all of your revenue streams and liabilities, rates of interest and payment dates, to be certain that you take the proper steps to tackling your massive debt situation.


  • Budget: This first step involves doing a real and honest assessment of your ongoing expenses: a proper budget. Figure out exactly what you spend on housing, transportation, utilities, food, entertainment, clothing, and anything else you need to function on a regular basis. Get a thorough comprehension of your income from all different streams. If you have multiple jobs, receive dividends, get tips, or anything else, then consider these as viable revenue streams. Assess where you can cut costs to try and pay more than the minimum payments expected for your loans.


  • Downsizing: The next thing to consider is the opportunities you have to downsize your mode of living. If you have two cars, or an excessively expensive vehicle, then consider the option of trading them in for something smaller. If you rent a large apartment with a spare room, consider finding something smaller or renting out the spare area. By reducing your cost of living as much as possible, you free up assets to pay down your massive debt more quickly than you could otherwise.


  • Debt consolidation: If both the above still leave you struggling with your payments, consider the option of taking out a credit consolidation loan. It takes all of your separate debts and bundles them into one place. This way, you get a lower monthly payment and a reduced interest rate. In fact, it gives you the chance to save thousands over the course of your repayment.


  • Debt settlement: If you find yourself with a decent sum of money though not enough to pay your debts in full, a consumer proposal may be a viable route for you to consider. Essentially, this is the act of settling your debts with your creditors for a smaller amount than you otherwise owe.


  • Bankruptcy: A measure of last resort, this is for situations where, after consulting with a Licensed Insolvency Trustee, you learn it is best to proceed with bankruptcy.


Final Notes

The important thing to know is that help is available.

Credit counsellors and Licensed Insolvency Trustees work on a non-profit model so that you get the chance for a no-cost consultation.

These skilled and accredited professionals will assist you in making intelligent financial decisions that preserve your interests over the long term.

By reaching out for assistance, you get the advantage of early planning and all the opportunities possible to keep your finances and credit intact.

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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