There are a number of options for debt relief in Toronto that are available to those who have a large amount of debt and suddenly find themselves no longer able to pay it off. Each option will certainly affect your way of living in some way. You may have to give up certain things like cable TV and magazine subscriptions. Others will need to struggle and work on a second job to make payment deadlines. Therefore, choosing the right option is key in ensuring success in managing and eliminating your debt load.
So what kinds of debt relief are available to me?
Self-help methods for debt control
You can develop a plan to pay off your debts on your own by
using financial tools like a budgeting worksheet and debt calculator to help
you get a sense of how bad your financial situation really is. This will help
you figure out how much your income is, what type of expenses you are paying
and how much you can afford to pay off your debt and put toward savings. For
those who are nearly insolvent, taking this step will help you work out a plan
before seeking professional help.
Professional Help for Debt Relief
Credit Counselling
One way to manage and eliminate debt is to get help from a
credit counselling agency. One of the best strategy that credit counselling
uses to pay off your debt is through a debt management program (DMP). They will
negotiate with you and your creditors
and agree on a certain amount that you will have to pay on a regular basis.
Once you sign up for a debt management program, you will start making regular
payments to the agency who will in turn use those payments to pay off your creditors
according to the terms of the plan.
Debt Consolidation
Debt consolidation is the process of combining all of your
debts and multiple bills into one single loan that results in having one debt
balance, one interest rate and one lower regular payment. The overall effect is
a lowered interest rate on your existing debt, saving you money in interest
charges which you can put towards paying off the principal amount. It’s
important to note, however, that your total debt amount is not reduced in this
particular debt relief strategy.
Consumer Proposal
A consumer proposal is a legal agreement that is worked out
by a Licensed Insolvency Trustee with all your creditors to negotiate a
reduction of your total debts so you will just have to pay a portion of what
you owe and your creditors agree to write-off any remaining outstanding
unsecured debt. From the date you file a consumer proposal, you are provided
immediate protection by the law and collection companies and creditors can no
longer contact you, interest charges stop accumulating, and most wage garnishments
cease instantly.
Bankruptcy
In some cases, filing for bankruptcy can be the most
efficient solution to eliminate debts. It is the very last option to be
considered after all other alternatives have been evaluated. Similar to a
consumer proposal, a bankruptcy can only be administered by a Licensed
Insolvency Trustee and you are provided the same legal protection on the very
day you file. Contrary to what many people believe, you will not lose
“everything” in a bankruptcy, and most, if not all, of your debts are
completely wiped out.
While there may be several options for debt relief in
Toronto to choose from, you’ll have to take into account the fact that your
financial situation is different from other people and one option that may have
worked for others may not necessarily work out for you. The best way to choose
the right solution for your specific debt situation is to understand all the
options you have out there not only in getting rid of your debt but also in
helping you prevent debt problems from happening again.
