What are the requirements to enter a debt repayment program?

Did you know that the average Canadian household owes $1.78 for every dollar earned?

Debts are rising in Canada, and more and more people are looking for solutions.

There are several options when it comes to debt repayment, and reaching out and seeking help early can help to prevent debts from spiralling and save you money in the short and long-term. 

Types of debt repayment 

There is an array of debt solutions available, and the option you choose will depend largely on your employment status, your income and the amount of money you owe. 

Credit counselling

In some cases, changing your spending habits, learning to budget and tackling high-interest debts will enable you to clear debts and avoid borrowing more money.

A credit counsellor can help you take control of spending, make use of budgeting and provide you with tools to manage your money more effectively in the future. 

If you have debts that you cannot repay, a credit counsellor can liaise with creditors on your behalf to come to an arrangement to repay the debts, usually over a period of time.

It may also be possible to reduce the value of your debts by negotiating lower interest payments.

With this option, you’ll pay back your debts in full, but you’ll usually have more time to do so and your creditors won’t hassle you once an agreement has been reached. 

Debt consolidation

Debt consolidation offers a solution for people who have multiple debts and creditors.

Rather than trying to cover a series of payments every month and incurring interest charges, you take out a single loan to cover all your debts.

You will then pay off your debt consolidation loan, making one payment every month.

Debt consolidation loans are not viable for everyone who is in debt, and there is a risk of being turned down if you have a very low credit score and you owe a lot of money.

Consumer proposals

If you’re struggling to pay bills and clear debts, a consumer proposal may be an option worth considering.

A consumer proposal is a legally binding agreement between an individual and their creditors, which outlines a repayment plan.

The proposal is drawn up by a licensed insolvency trustee, and it must be supported by the majority of the creditors involved.

In many cases, consumer proposals offer an alternative to bankruptcy, and they benefit both the debtor and the creditors.

Between January 2019 and January 2020, consumer proposals accounted for 60% of insolvencies in Canada. 

Conclusion

Debts can mount up quickly, so it’s hugely beneficial to try and start repaying them as soon as possible.

If you’re in debt, there are several repayment programs and solutions available.

Whether you’re struggling to make a dent in your debts due to interest fees, or you have no means of paying back your creditors, we can help.

Call us today to find out more. 

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