Informal Solutions For Reducing Your Debt

2015-01-05   minute read

Debt Solutions

People are always asking: are there options before I have to file a Consumer Proposal or a bankruptcy?

The answer is YES, but like anything, it takes commitment and diligence for them to work. So what are the options? 

The easiest and most effective one is to work on a monthly budget and stick to it. Look at where you can reduce some of your expenses without giving up everything. For example, take a look at your budget and examine your entertainment, dining and / or clothing expenses and see what can be cut back. Use any extra money at the end of the month to pay down your debt.

Another option is to call your credit card companies and ask for the lowest interest card possible. You may lose your points or rewards, but the money saved on the lower interest payments will be worth it.

Do you have any assets, like a house, extra cars, savings, investments, RRSPs, etc.? If you do, depending on your level of debt, you may want to use your assets as collateral to get a loan at a much lower interest rate and then pay off your other debt. You could also choose to sell the assets outright and use the funds to pay off your debt. The key here is to speak to a professional so you are coming up with a long-term solution, not just a temporary quick fix.

Another option is to go to your bank and ask for a consolidation loan. Basically this involves you asking the bank to give you an amount of money large enough to pay off all your debt, leaving you with just one payment to the bank at a lower interest rate. For this to happen, you need to be qualified by the bank. If you do, the bank may lend you an amount of money to pay off your other higher debts. The only issue is that for this type of loan, the bank usually only lends money for debts that you have at their bank. 

As you can see, you do have options before bankruptcy or a Consumer Proposal. They key is dealing with your debt problems early on so they do not become overwhelming.

If you have tried some of the methods above but are still struggling with your debt payments, contact an MNP Ltd. debt professional near you to learn about what other options may be available.

Consultation icon