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 Licensed Insolvency 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 who are able to make payments to creditors (either monthly or as a lump sum), but need to change the current arrangement of their payments. A Consumer Proposal can change the payment terms (up to a maximum term of 5 years) and the overall amount you are required to pay. A Bankruptcy is a formal process to relieve an individual of their debts to unsecured creditors. A Bankruptcy lowers your credit rating to the lowest score (R9), while a Consumer Proposal has less impact on your rating (R7). For a more detailed explanation of each process, visit the Explore Your Options section of the website.

Bankruptcy isn’t the only option. Numerous solutions including a Consumer Proposal and other options may be available. Contact an MNP office today to discuss your options with a Licensed 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.
• I’ve taken out one or more payday loans.

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.

A secured debt is directly tied to an asset which may be seized by a lender if you fail to make your required payments on it. For example, a mortgage is considered a secured loan, with your home as the related asset. If you fail to make your mortgage payments, your secured mortgage lender has the right to foreclose on (i.e. seize) your home and sell it to pay off your debt. If the proceeds from the sale of an asset don’t entirely cover your debt, your lender will usually require you to pay the difference. Typically speaking, secured debts include loans for your home (including second mortgages), vehicles (including cars, boats, RVs, equipment, etc.) or personal loans that pledge personal property as collateral.

In contrast, unsecured debts do not give your creditors any right to directly seize your assets. If you fall behind on payments, they may take other actions, such as garnishing your wages, hiring a debt collector or threatening legal action. In addition, they will likely report your delinquency to a credit bureau, which may hurt your credit score. Examples of unsecured debts include credit cards, student loans, payday loans, cable / phone bills, utilities and debts owing to the government (CRA) for income taxes.