Debt Counselling in Toronto to Get your Finances Under Control

Debt counselling in Toronto is a form of debt recovery process that combines basic credit education on financial management and debt relief services through a Debt Management Program or DMP. The main objective of this type of debt relief program is to help the creditor gain control of his finances and avoid a consumer proposal or personal bankruptcy.

What to expect in debt counselling

Debt counselling services are usually offered by nonprofit organizations, and is typically the first option for debt relief that is offered to people who are struggling with heavy debt but can still manage to pay their bills.

To help the debtor get out of debt successfully and to  prevent him from going back into debt again, the program utilizes a combination of different procedures, such as budgeting techniques, credit education, money management, debt consolidation loans, and creditor negotiations, among many other strategies.

The entire process can take quite a while to complete, depending on the amount of debt that you owe and the debt counselor’s’ ability to negotiate an agreement with your creditors. Generally, you can expect the following in a debt counselling:

• Discussions with a qualified financial counsellor on developing your budgeting skills and managing your spending habits
• Help from a debt counsellor to negotiate with your creditors and get them to lower or eliminate late fees and other negotiable charges that currently form part of your debt load
• Help from a debt counsellor to negotiate with your creditors and have them agree to stop all collection activities
• If you need to obtain a debt consolidation loan, a debt counsellor can provide assistance in finding a lender who can offer a low interest rate and a long amortization period which will help lower your average monthly payment amount.
• Help in developing a  customized debt repayment plan which will allow you make one payment each month to the debt management company, who will take charge of dividing payments and forwarding these to your various creditors.   

Where to find debt counselling help

Talking to a qualified debt professional is the very best way to find out if debt counselling is the right option for you. To protect your rights and best interest,  make sure to only deal with officially recognized or authorized debt professionals with many years of experience. In Canada, these people hold the following designations:

an accredited debt counsellor, usually one who has obtained certification through the Accredited Financial Counsellor of Canada (AFCC)

a Licensed Insolvency Trustee (LIT)

a qualified insolvency counsellor who is licensed by the Office of the Superintendent of Bankruptcy

Each of these qualified professionals are bound by a code of conduct that requires them to explain to you all of your options for debt relief. This means that even if you don’t need to file for bankruptcy, you can talk to a Licensed Insolvency Trustee and get guidance and recommendations on all legal solutions that is best for your financial situation.

Through debt counselling in Toronto many Canadians find out that they can take measured, reasonable steps to help them overcome their debt problems over a period of time. The program can be a successful and very positive experience for qualified consumers as long as steps are taken to find a reliable debt counselor and the debtor is fully committed to the process of getting help, getting out of debt and working on long-term financial security.

The Many Benefits of Filing Personal Bankruptcy in Toronto

When declaring personal bankruptcy in Toronto, an individual makes the choice to surrender all of his assets and possessions to a Licensed Insolvency Trustee in order to obtain relief from overwhelming debts and protection from creditors. It is a legal option for debt relief provided by federal law under the Bankruptcy & Insolvency Act.

Bankruptcy is usually taken as a very last resort by people who are no longer able to pay off their debts as it can have a considerable effect on their future credit, social status, and their self-image. Nonetheless, it offers several advantages to you as well as to your creditors. It can really assist you in obtaining relief from your debts and at the same time offer your creditors an equal and fair solution for recovering the money that you owe them.

Let’s take a look at the many ways you can benefit from declaring personal bankruptcy in Toronto:

No more harassing collection calls

One of the worst things to cope with when dealing with mounting financial pressures is the stress of dealing with bill collectors. Each day you wake up wondering if you’ll get one of those nasty phone calls  from collection agencies and creditors demanding their money. The anticipation every time the phone rings can be incredibly mentally and emotionally taxing. Once you file for bankruptcy, your Licensed Insolvency Trustee will notify your creditors of your bankruptcy within days and once they receive the notice from the trustee, your creditors and collection agencies are no longer allowed by the law to contact you. Your trustee will take over at this point and take charge of communicating with your creditors directly.

Stop wage garnishments

When you stop making payments on your debts, your creditors can go to court and obtain a wage garnishment against you. This court order legally forces your employer to send a portion up to 50% of your salary directly to your creditors as payment of your debts. When you file for bankruptcy, your trustee will notify your employer, creditors, and the court of your status and garnishment of your wages should immediately stop, except for wage garnishment for child support orders enforced by the Family Responsibility Office.

Stops all legal actions

Once you file for personal bankruptcy, a Stay of Proceedings takes effect which automatically puts a stop to legal actions filed against you for non-payment of debts. This means that lawsuits are suspended, foreclosures are halted, repossessing of property is stopped and garnishments being processed are put on hold.  Whatever stage the lawsuit is at in the court of law, the Stay of Proceeds draws all legal proceedings to a close and creditors can no longer make any attempt to undertake any type of collection activity towards you.

Eliminate debt

Once you have completed your bankruptcy and are discharged, which happens usually within a 9 to 21 month period, then all debts that were included in your bankruptcy are eliminated permanently. Most, if not all, unsecured debts may be eliminated, including debts on your credit cards, lines of credit, bank loans, payday loans, income taxes, overdrafts, and student loans if you’ve been out of school for more than seven years. It’s important to consider that some debts will remain, in particular secured debts such as your mortgage, car loan, alimony, child support, court fines or penalties and student loans that are less than seven years old.

Filing for personal bankruptcy in Toronto is a difficult decision. You may find it challenging to rebuild your credit, secure loans, and adjust to a scaled-down lifestyle. However, if it is an option that is best for your situation, it can give you tremendous relief from the burden of massive debt and provide you with a fresh financial start.

Debt Counseling in Toronto - Is it an Option to Pay Off your Debt?

In Toronto, debt counseling can help people who are grappling with financial complexities find the best strategy to pay off their debt so that they can pull themselves out of deep financial trouble. The process may involve a range of debt-recovery practices, including one-on-one counselling, group courses and seminars and, if necessary, a long term repayment plan called a Debt Management Program or DMP for those who are seriously indebted.

If you think this may be the option to help you regain control over your financial life and stop the collection calls, it may be necessary to review all the steps involved in the process.

Step 1 - Initial meeting with the debt counselor

Once you’ve chosen a counselor who is reliable and competent, you will need to hand over your personal and financial information for review. This step usually involves a quick review of your overall financial situation and a discussion of possible solutions that will best meet your needs.

Step 2 - Financial analysis

The second step of the process will involve an in-depth assessment of your overall financial situation. This will include summarizing in detail your monthly living expenses, sources of income, and debts. The debt counselor will make a list of all your assets and all your sources of income and then compare these to a list of all your regular and irregular expenses. The comparative analysis will reveal if your current monthly living costs exceed your income after making any debt payments. At this point, you will be able to see if you are living with your means and how much your total debt load is.

In addition to what has already been accounted, the counselor will also go over your monthly statements from various creditors and help you understand how surcharge fees, in addition to high interest rates, are increasing your balances even with irregular payments and buying restraints. This assessment will help you see a clear picture of how quickly your debts are growing and how serious your debt problems are.

Step 3 – Finding solutions

Part of the debt counseling process will involve a discussion on potentially increasing your sources of income, cutting back on your living expenses and other actions you can take to help reduce expenses until your financial situation improves.

At this point, if the counselor deems that it is the best solution to pay off your debt he can recommend that you go through a debt management program (DMP). A DMP is not a financial loan, but a voluntary repayment program that involves a consolidation of payments to help you pay off your debt within four to five years maximum.

Once you decide to enroll in a DMP, your counselor will contact your creditors and ask for their participation in putting your debt management plan to work. In the process, your counselor can negotiate with your creditors to reduce or eliminate interest rates and other fees that were charged on your debts.

It is important to know that not all types of debt are covered in a debt management program. Usually, only unsecured debts such as credit cards and student loans are included. Secured debts, like a car loan or a mortgage are generally not covered as these assets can be repossessed by your creditors in the event you fail to make payments.

Your DMP contract will require you to make regular payments which are deposited into a trust account. Your counsellor will use the funds to pay out your creditors, usually every month and depending on the terms of your contract.

Debt counseling in Toronto has provided many Canadians with an alternative to be able to repay their debts in full and to avoid filing for bankruptcy. However, it is not an option available to everyone. You have to qualify for the program and that means that you can afford to make the regular payments and are able to adhere to contract stipulations. You can consult with a debt counselor, a credit counseling company or, better yet, a licensed insolvency trustee who will help you to understand all your options fully. Of these experts, it only the licensed insolvency trustee who has the capacity to explain all the other options that are available to you for paying off debts as well as the legal consequences that are involved in each.