Get Debt Free When Financial Stress Feels Overwhelming

Being in debt can feel overwhelming. There’s constantly bills to pay and it can feel like there’s never enough money to cover it all. When you start making payments late or not at all, creditors can start pursuing you by moving your debts to collections or taking legal actions. Getting collection calls or finding out that your wages have been garnished only add to the stress.

There are ways to overcome financial stress when you need help. Debt relief programs such as bankruptcy and consumer proposals are designed to help honest debtors who cannot repay their debts. There are steps you can take to pay back loans on your own, but they may not be enough.

Pay Back Debt on Your Own

Can you pay back what you owe on your own? If you’re able to keep up with payments, you can avoid taking a hit to your credit rating that can stay with you for years.

However, paying back loans on your own is expensive and takes time. Interest will keep growing on your credit accounts and you wind up paying much more than you initially borrowed. High interest loans like payday loans can grow rapidly and it can be a struggle to get out of them. Debt relief options like a consumer proposal provide debt reduction and halt interest rates.

There are a few steps to take to see if you can do it on your own:

• Take stock of all your credit card accounts, money owing to utilities, payday loans, etc. A sure sign that you’re in financial trouble is that you don’t know how much you owe in total.
• Create a monthly budget. Can you cover the cost of living and make monthly payments on all of your accounts? If you can’t make more than minimum payments, it’s time to consider debt relief.
• Stop borrowing and change your financial habits. There are many root causes for debt, but practices like charging your credit card for splurges when you don’t have the money can add to the stress.

Use a Consumer Proposal

A consumer proposal is an alternative to bankruptcy available to consumers who are insolvent. A consumer proposal will:

• Reduce the amount you owe unsecured creditors. The percentage of your original debts that you have to pay could be as low as 20 to 30% depending on your circumstances.
• Stop interest charges that accumulate on your accounts.
• Arrange a single monthly payment that you make to a bankruptcy trustee or licensed insolvency trustee, which is then distributed to your creditors. This payment does not change even if your income does.
• Protect assets that might otherwise have to be used to repay creditors in a bankruptcy.

A consumer proposal can be arranged by a licensed insolvency trustee who reviews your finances and determines how much you should be able to make in monthly payments. The proposal is then sent to your creditors. If the majority (based on amounts owed) accept the proposal, then all creditors are bound by the proposal.

Getting out of debt is one of the best things you can do for yourself. When you’re out, you’ll have more money for yourself, more time to put toward your goals, and more head space once you’re free from collection calls and growing bills. Whether you do it on your own or with debt relief, you can get started today.