Debt Relief In Canada

2015-10-01   minute read

Michelle Scheller

Financial struggles and high debt ratios are becoming more common among Canadians. Getting finances in order can be a very overwhelming task for many individuals. It is however, a very important task to tackle in light of increasing debt loads.

Two people crunching numbers on a laptop with a notebook on the table

Many individuals are researching and seeking out what debt relief options available to them. The demographics are not limited to one group. It may be a student looking for a career, a family trying to meet the rising costs of living or a senior living on a fixed income. The good news is there are solutions available. It’s time to take charge.

The first step is to assess your household expenses. It is tough to develop a solution if you don’t know your starting point. Keep track of your monthly income and expenses to see where changes can be made. Once this is defined, you will be in a better position to determine what is available for debt payments after your basic monthly living expenses are met.

There are different types of debt and one blanket solution will not cover them all, for example:

  • Mortgage debt - Are you up to date with payments? If not, Canada Mortgage and Housing Corporation (CMHC) may be able to provide information on what is available when dealing with lenders.
  • Student loans – There are programs available that offer debt forgiveness and interest relief, you must be proactive and contact the lending agency which may be a bank, a Provincial program or a National program.

We encourage you to seek professional advice. A Licensed Trustee in Insolvency and Restructuring will be able to help assess your situation and suggest possible options, which may or may not include a formal proceeding in the form of a settlement offer to creditors known as a consumer proposal or bankruptcy. There is no cost for the initial consultation which can often put your situation in perspective from a fresh point of view. This meeting may identify solutions that you can negotiate on your own and may include the following:

  • One debt relief option is to consolidate your debts. This is done by approaching a lending institution where you can borrow enough to pay off your multiple debts and leave you with one manageable payment. One payment is much easier to handle then many with different due dates. You will need to pay close attention to the interest rate and repayment schedule to ensure that it fits into your budget. This solution should be a final solution to pay off the debt and not just a temporary fix by reducing the balances on the multiple debts with the expectation the reduced balance will make the overall payments more manageable. Often a solution of this nature will require you to provide security in the form of pledging assets or a second mortgage on your home.
  • Another option is to contact your creditors on your own to see if they can accommodate lower monthly payments, a longer repayment period, or possibly lower interest rates.

You may consider selling possessions to reduce your debt load. Take an inventory of your possessions. Is there anything you are willing to part with that could bring in some needed funds? If you don’t have the ability to increase your income or decrease your expenses, this could be a feasible option in order to provide some relief.

Reviewing your financial situation and trying to work through all the options on your own often becomes a daunting task. If these options are not going to provide you with long term debt relief or if you wish to speak to someone, there is help available. Seek out professional advice from a Licensed Trustee who will take the time with you and review all the formal and non-formal debt relief options and how each will impact you. There is a solution. The key is in determining which one is the best for you.

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