Solving Debt Problems

Take hope. You can solve your debt problems. You’ve got options. You can deal with creditors on your own. Or others can help you, like qualified credit counsellors.

Credit counsellors make powerful allies. They know all the ins and outs of credit and debt. They are experts in personal money management. They help you solve debt problems without pressuring you or judging you. Find out in the following pages about a Debt Management Program tailored to your life and the debts you are facing. It can get you on track and free you of worry.

Other topics in this section include:

• Consolation loans
• Consumer proposals
• Bankruptcy

Take action through a Debt Management Program

There is a smart way to deal with debt. Maybe it’s right for you. It’s something called a Debt Management Program.

A credit counsellor works with you in the program, which helps you through a number of steps:

• You develop a budget with a single monthly debt payment you can afford
• Creditors are asked to reduce your monthly debt payments to match the budget
• Creditors are asked to remove or reduce interest on your debts
• On a monthly basis, you make a single debt payment into a secured trust account which is used to cover all of your debts

The Debt Management Program is a simple process that can take the worry out of your life, and help you avoid bankruptcy. For more details about the Debt Management Program, talk to a credit counsellor at Credit Canada Debt Solutions.

What is a consolidation loan?

Some people try to deal with their debt problems through what is called a debt consolidation loan.

Banks and private lenders offer consolidation loans.  A consolidation loan brings all your debt (credit cards, payday loans, etc.) together into one monthly payment.

Advantages of a consolidation loan:

• Make one monthly debt payment
• The interest rate on the consolidated debt should be lower than all the interest previously paid on separate debts
• You can avoid negative effects on your credit rating if you maintain all of your monthly payments

Disadvantages:

• In some cases the interest rate may be higher than the interest rates on your separate debts
• There is frequently a need for collateral (for example, a car or home) to secure the loan

The basics of a consumer proposal and bankruptcy

People who are in a debt crisis sometimes look at either a consumer proposal or bankruptcy to deal with their situation.

A consumer proposal allows you to reach an agreement with your creditor where you pay only a part of the original debt owed.  Often, future interest on the remaining debt is forgiven. Creditors often agree to this sort of arrangement when they think the debt might not be paid at all. They hope to get at least some of their money back.

Bankruptcy is another story. It comes at a big price, which is one reason why it is often referred to as the solution of last resort.

A majority of your debt may be forgiven (with a few special exceptions), and some of what you own may be taken away.

Your credit rating is affected negatively, and approval for unsecured credit can be very difficult.

Find reputable help.

You can try to manage a crippling debt on your own. Most others who do keep having debt problems until they seek professional guidance.

Keep in mind that dealing directly with creditors is a tricky business. Creditors do not look at your situation objectively. They have their own best interests to worry about.

Trustworthy, qualified credit counsellors go beyond all that. They don’t answer to banks or anyone else. You become their top priority. Also, if they work for a not for profit agency like Credit Canada Debt Solutions, the main focus of credit counsellors isn’t to make money, but to make individuals and families free to live full and happy lives.

Credit counsellors also get to the root causes behind debt problems. Those root causes usually involve a person’s spirit and attitude towards money. It takes very special skills to deal with these sorts of things. But it is through the heart and mind that most people rise above their debts and go on to lead better lives.