5 Urgent Things To Do When You Have Too Much Debt

Dealing with debt can be an overwhelming experience.  Quite often, people do not understand how they accumulated so much debt and in some cases in a very short period of time.  For some people, matters become even more stressful when they start receiving harassing phone calls from collection agencies or legal threats from lawyers acting on behalf of creditors. 

Person looking at their computer in an office

There is no shortage of so-called “debt experts” claiming to be able to rid all of your debts by one simple phone call to your creditors.  Only a licensed Trustee in Bankruptcy or Administrator of Consumer Proposals can legally stop most creditor actions against you and help you legally release or reduce most, if not all, of your debts. 

To help you get started, here is a list of 5 urgent things to do when you have too much debt:

  1. Stay calm and focused.  It’s important not to allow your debts to control your emotions or your quality of life.  The fact that you have recognized that you have an unmanageable financial problem is an important first step in taking control of your financial situation and dealing with your debts.
  2. Obtain a copy of your latest bill statement from each creditor.  If you are unable to obtain a bill statement or if you do not know who your creditors are, you can obtain information by requesting a copy of your credit bureau report from Equifax and TransUnion. 
  3. Your monthly bill statement from creditors contains valuable financial information.  Review your monthly statements to gain an understanding of the debt owed to each creditor, the annual rate of interest charged by each creditor, the minimum monthly required payment to each creditor and the number of years it will take you to pay each debt in full if you were to only make the minimum required monthly payment.
  4. Prepare a budget and be realistic about your monthly fixed and variable expenses.  Prepare a budget for the purpose of listing and tracking your monthly expenses.  Preparing a budget on a monthly basis will give you a “snap shot” of your income, your expense and the available disposable income that you will have left after paying your general living expenses.  Once you have determined your disposable income, you can use that money to pay your monthly debts and hopefully put some money towards savings.  After listing your monthly income and expenses, review your budget for reasonableness.  If you have listed an expense in your budget that you can realistically do without, consider removing that expense from your budget and making the money available for debt repayment and some savings.
  5. 4. Assess your personal and financial situation. This evaluation will require that you ask yourself questions as:
    • How many creditors do I have and how much do I owe to all my creditors combined?
    • How long will it take me to pay all my debts in full and what will be the minimum monthly amount that I will be required to pay in order to accomplish this goal? Refer to your monthly budget to ensure that you have enough disposable income to pay your debts in full within a reasonable period of time.
    • What is my employment situation?
    • What is my family situation? Do you have children, a spouse, or elderly parents to support?
    • How old I am? Age is an important factor in evaluating and dealing with your debts. You do not want to find yourself in retirement with unmanageable debt. Likewise, you do not want to find yourself being unable to move forward in life because unmanageable debt is preventing you from doing so.
    • Think about savings and investments.  Ask yourself if your debts are preventing you from saving for emergency needs, for a home, a car, personal travel or retirement, to name a few.
  6. Take control of your debts by taking action in dealing with your debts.  Consider if you require the assistant of a licensed professional to help you restructure your debts.  Only a licensed Trustee in Bankruptcy or Administrator of Consumer Proposals is able to obtain a legal stay of proceedings against your creditors, remove most garnishments and assist you in getting most of your unsecured debts under control by having your debts released through a bankruptcy or by reducing the amount of your monthly payment and obtaining an extension of time to pay your debts through a Consumer Proposal.

How do I locate a Trustee or Administrator of Consumer Proposals?
You can find a list of licensed Trustees or Administrators of Consumer Proposals in your area by searching the Trustee Registry of the Office of the Superintendent of Bankruptcy website https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/home.

You may also contact the MNP office in your region. All of our Trustees and Administrators of Consumer Proposals are licensed with the government and will be happy to sit down with you for a free, confidential, no-obligation consultation.