Debt Relief FAQ
The first step in combating debt is to analyze where you are spending your money. If you see a clear way to stop incurring more debt and take action immediately to consistently spend less, you may be able to regain control on your own. However, if your financial troubles persist, an MNP Trustee can discuss different options with you such as Consumer Proposals, Bankruptcy or put you in contact with a Credit Counselling organization during our free confidential consultation.
A Consumer Proposal is for individuals that still have a source of income and are able to make payments to creditors, but need to change the arrangement of their payments. A Consumer Proposal can change the length of payment (up to a maximum term of 5 years) and the overall amount the debtor is required to pay. Whereas a bankruptcy can be considered a clean start, as debts to unsecured creditors are typically forgiven. A bankruptcy lowers your credit rating to the lowest score (R9), while a Consumer Proposal has less impact on your rating (R7).
Bankruptcy isn't the only option. Numerous solutions including a Consumer Proposal and other options may be available. Our Debt Calculator can provide an idea of the best debt solution for you or you can contact an MNP office today to discuss your options with a Trustee.
- My wages are being garnished to pay for my outstanding debts.
- I am afraid to answer the phone because it may be a debt collector calling.
- My creditors are threatening to sue me, repossess my personal property, or hire a collection agency to recover their money.
- I have been borrowing money for household expenses from friends and family to make it from one pay cheque to the next.
- I am paying one creditor one month and another one the next because I don’t have enough money to pay them both.
- My financial problems are affecting my health, my job and/or my marriage.
- I am going over my spending limit or using credit cards as a necessity, instead of a convenience.
- I am only making the minimum payment on my credit card balances.
- I have been receiving second notices about overdue accounts.
- At least one utility company cut off service because of my outstanding bills.
- I spend 20% or more of my take-home pay on loans and credit card debt payments.
- I am paying overly high interest or service charges because I don’t pay my bills on time.
- I am renegotiating loans to cut monthly costs, or looking for a debt consolidation loan to pay off old bills and a few new ones.
Insolvency is a formal term from bankruptcy law. If you are insolvent, it means your liabilities or debts exceed the value of your assets. You would also be considered insolvent if you are unable to pay your debts on time. This is an important consideration in financial analysis and credit matters.