Celebrate Canada Day With Three Steps Toward A Debt Free Future

2018-06-28   minute read

John Haralovich

Debt Solutions

We have seen countless news reports, tweets, blogs that tell us that Canadians have more debt than ever.

Person calculating their bills and money

Global News reported that although Canadian's are carrying more debt, there are fewer number of individuals filing for bankruptcy. There could be two reasons for this:

  1. Canadians are comfortable managing their day to day lives having debt;
  2. There has been a significant increase in Consumer Proposal filing, which in short, is formal debt reduction process which stops the interest and reduces the monthly payment necessary to service your debt.

However, not everyone can avoid bankruptcy. Many famous people like Donald Trump, Mike Tyson, Conrad Black and Cindi Lauper have had to seek bankruptcy protection for various reasons. Sometimes athletes have filed for bankruptcy shortly after their professional careers have ended, again for various reasons. The underlying issue was they could not adjust their life style to mirror the funds they were generating.

Canada Day is around the corner and provides an opportunity to measure your current financial situation and compare it where you had believed you would be half way through 2018. 

Take Time and Be Realistic

First, do not complicate your review. Simply look at what your debt level is today compared to where it was at the end of last year. 

Second, be true to yourself; if your debt level went up, was that expected? Was it for building equity or was it related to overspending or because of unexpected events?

Third, determine whether you can reverse the trend and reduce your levels of debt. If you find your progress to date has increased your levels of debt:

  • Determine why your debt is increasing
  • Note whether you've taken steps towards reducing your debt levels
  • Decide if you need financial assistance.

Part of being successful is believing you have taken effective steps to reduce your debt — and closely monitoring your progress. Remember, it is important to be honest with yourself to be able to reach your financial goals.

By setting levels of debt reduction that are not achievable, you will become disappointed and frustrated with your progress; again, be true to yourself and your family, set realistic expectations. You can tackle this alone or you can call in professionals to help you.

Consumer Proposals

If you determine you need help to tackle your debt, you likely have several options to bankruptcy, including filing for a Consumer Proposal.

In a Consumer Proposal, a Licensed Insolvency Trustee will work with you and your creditors to create a formal arrangement to settle your debt, often for less than the full amount owing. Usually this involves consolidating all your unsecured debts into a manageable, single monthly payment over a period of up to 60 months (although other arrangements can be made).

You also have the option to deal with those secured debts that you struggle to maintain.  Sometimes you cannot reach our goals because you are afraid the loss of returning the secured asset is a debt you must repay in full.  In fact, the unsecured portion could be included in your Consumer Proposal. The secured loan payment is removed and you can use that cash flow to help you towards reaching your financial goals.

Never forget your goals. A Consumer Proposal is a reasonable, progressive tool to help achieve your debt reduction goals. When the agreed monthly payments are made, your debts are eliminated, and you can start to begin to rebuild your credit.

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