If you’re like most people, you don’t want to think about your debt at all, especially if you’re in a debt cycle you can’t seem to break free of.
If it feels like you’re drowning in debt, you might feel frozen in fear of what will actually happen when you seek help.
The process of dealing with your debt when you seek out help though is actually a lot more stress-reducing than you think; imagine being able to pay all your bills on time, and still have money left over for savings.
Sounds like an impossible goal?
You don’t have to deal with your debt alone; if you want to know the process of what really happens when you decide to get debt help, then keep on reading.
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Making the first call
If you are in a position that many call “hitting rock bottom” or you simply have gotten to the breaking point, you’re likely needing to figure out how to get debt help.
However, if you get help before that, it can mean a world of difference when it comes to figuring out your finances.
The initial consultation —with a Licensed Insolvency Trustee can really feel like a huge breath of fresh air, and while it’s nerve-wracking to make that appointment, you’ll immediately feel a huge load dropping from your shoulders.
A Trustee is an expert in debt, and have seen every imaginable debt scenario, so have years of experience to draw from to help you out.
While you may feel alone, you’re not the first person to get caught up in debt.
There is help, and when you seek out a Trustee, it’s help without judgment.
What actually happens when you decide to get debt help?
The initial consultation
So, you’re behind on your credit card payments from a variety of reasons; you had an unexpected mechanical issue with your car, you had recent moving expenses, and on top of that, your boss cut your hours recently so you have less income.
If you’re struggling with the reality that you are deep in debt—deeper than you can easily get out of by yourself—then you are probably very near to picking up your phone call to set up that initial consultation with a licensed insolvency Trustee.
What can you expect from that first consultation?
Let’s look at some of the things you’ll go over with one of our Trustees should you meet with us:
- When you make your phone call, we’ll ask you to bring a set of specific things to go over to so we have a clear idea of how much you owe, what your current expenses are, and look at your income. You’ll want to provide the following things:
- The value of your assets. This should include if you have paid anything on a mortgage, your vehicle, and bank accounts, and any money that you have in your registered retirement savings plan
- The total amount you owe including any student loans, all lines of credit, your vehicle loans, car loans, mortgage, and credit cards.
- Your income
- Finally, your monthly expenses including rent, utility payments, living expenses like groceries and fuel, and your car payments.
- When you sit down at the initial consultation with your Licensed Insolvency Trustee, the Trustee will understand your financial situation and will present to you the various options that are available to you. He or she will also go over how long each of these will take, and propose the best plan of action. Depending on your scenario, your Trustee may discuss you look into debt consolidation, file for a consumer proposal, or declare bankruptcy.
Depending on what you and your Trustee decide, here are some of the various ways you may choose to deal with your debt.
(It might feel overwhelming to even read these options, but trust us, it gets better!
The sooner you can deal with your debt, the sooner you can go back to feeling normal.)
In Canada, debt consolidation can take a couple of different forms, including each of the following options:
- Debt consolidation loan.
- Consumer proposal.
- A home equity loan, refinancing, or a second mortgage.
- Consolidating on a line of credit.
- Debt management program.
- Debt settlement.
Let’s look into some of the more common ways that one of our Trustees can help you with your debt.
Debt consolidation loan
One of the most effective ways to pay down debt is via a debt consolidation loan.
This option essentially allows you to an extra loan out from a bank, credit union, or financing company to cover all of your unsecured debt, such as credit cards.
After that, you simply pay one monthly payment to the financial institute.
Instead of paying multiple creditors, you simply pay one single loan.
This can be a great idea if you are capable of paying down the debt, but find that your credit card interest is adding up since a debt consolidation loan often has a smaller interest percentage than many credit cards.
Should you and your Trustee decide that a consumer proposal is your best plan of action, your Trustee will begin the legal process in which your debts are consolidated into one, and in which your creditors are offered an agreement compiled by your Trustee.
The agreement will allow for one of two things:
- The overall debt that you are required to pay back will cease.
- The time you have to pay back the debt to your creditors will be lengthened, allowing you to pay back smaller payments over a longer period of time.
In addition, when filing a consumer proposal, the interest on your debt is halted.
You pay back your consumer proposal by making one direct payment to your Trustee each month.
They are responsible for allocating those funds to your creditors.
Finally, you may be able to claim bankruptcy.
You likely understand the basics of bankruptcy, but what you can expect is over a course of nine to 21 months, your debt is erased.
It is a fairly lengthy process.
If you have fears about declaring bankruptcy, many of them may be based on bankruptcy myths.
Your Trustee should be able to put these misconceptions to rest.
It’s time to make the call
If you are ready to deal with your debt, call Bankruptcy Canada today.
Our debt experts are here to help you, and we can schedule a no-obligation free consultation to weigh your options.
We understand that seeking help is the first step to dealing with your financial debt.
We’re here to help.