Week 8: Help, I’m Drowning in Debt!
MONEY SMART CHALLENGE
Money Smart Weekly Conversation Fact: If your drowning in debt, seek professional help instead of continuing to struggle on your own.
What are the consequences of not dealing with my debt such as not making payments or avoiding phone calls from collection agencies?
You may be denied a loan, or mortgage or credit when you really need it. Your credit rating will take a big hit which will seriously affect you ability to get credit or borrow any money for 2 years or longer depending on the seriousness of the debt. You debt may have to be repaid first, before any further lending can be advanced and often a better repayment history and credit rating has to be established after the debt is repaid.
Your house or vehicle can be repossessed after a few months of non-repayment and usually you take a bigger loss than the mortgage broker or the car dealership. You could be left with no car and a large debt if the dealership sells your vehicle quickly for much less than you owe on it.
Bankruptcy could become your only course of action.
You may be denied certain employment or have difficulties starting a business.
You will pay interest rates when applying for credit or loans.
You may have difficulties getting approved for an apartment, might have to put a deposit on utilities, might have challenges getting a cell phone on a plan.
You might have higher insurance premiums.
Mental and emotional distress.
If You Are Thinking…Help Me, I’m Drowning in Debt – I Need Help with Debt Now!
The Credit Counselling Society Could Be Your Life Line.
The Credit Counselling Society is a nonprofit organization dedicated to helping you figure out what you need to do to find your footing and get your finances back on track, and if they can’t help you, at the very least, they’ll refer you to someone who can.
They offer free, confidential and non-judgmental appointments in person or over the phone with professionally accredited Credit & Debt Counsellors.
They know it can be difficult to discuss financial matters and ask for debt assistance. Your Counsellor always has your best interests in mind. Feel free to ask all of your questions. At the end of the appointment they will provide you with an overview of your situation and your options.
There are alternatives to bankruptcy.
Take the information home and consider it carefully. Once you have reviewed your options, you can set up the next appointment with your Counsellor. It’s that easy!
In an appointment, a Counsellor will assist you in the following ways. They will . . .
• Review your financial situation with you.
• Help you create a budget to see how your expenses compare to your income.
• Look for opportunities to refine your budget and offer suggestions for you to consider.
• Explore all viable options with you to resolve your debt situation. There are no cookie-cutter solutions where one size fits all. You really need to sit down with a Credit Counsellor either in person or over the phone and go through your situation. Only then can the options that may work best for you be identified, and you can put together an action plan with a Credit Counsellor to fix your debt problems, end the stress, and get your finances back on track.
• Potentially help you save thousands of dollars in interest.
Some of the Debt Relief Options that May Be Available to You
Debt Management Program – if this program makes sense for your situation, your debt payments would be combined into one affordable monthly payment and your interest rates would either be dropped to zero or substantially reduced. Your debts would then be completely paid off in 2 – 5 years, and all records of the debts on the program would be erased from your credit report no later than 2 years after you finish it.
Debt Settlement – if you have access to a lump sum of money, you could potentially use this to settle your debts for less than you owe. While this is not an option for most people, it can be a good option for the right set of circumstances – especially extreme circumstances.
Consumer Proposal – if this looks like your best option, our Counsellor will refer you to a reputable bankruptcy trustee who would attempt to negotiate a monthly repayment with your creditors that is less than what you currently owe. Repayments on this program can also take 2 – 5 years. However, 4 – 5 years is more typical. A Consumer Proposal impacts your credit for the length of your program plus a maximum of 3 years.
Bankruptcy – if you file for bankruptcy, all collection activity on the debts included in the bankruptcy is stopped and creditors are typically forced to accept less for the debts owed to them than the borrower originally agreed to repay.
Both consumer proposals and bankruptcy come with long term consequence that should be carefully considered before entering into either option. Since both options involve the courts, a permanent public record is created. One place you can access this record is through a searchable online database which anyone can search for a small fee.
It’s also possible that having an insolvency on your record can affect future employment opportunities. Careers in finance, banking, security, law enforcement, and public service can be affected. For trades and occupations that require employees to be bonded, insolvency can be a reason why some insurance companies can refuse to issue a bond.
If you choose to go bankrupt, you should also know that future bankruptcies have more serious consequences than your first bankruptcy. For example, after your first bankruptcy, a record is kept on your credit report for up to 7 years. However, for subsequent bankruptcies, a record is kept for 14 years.
For more details on Consumer Proposals and Bankruptcy, go to http://www.nomoredebts.org/debt-help/bankruptcy-canada/consumer-proposal-vs-bankruptcy-the-difference-between-them
If you’d like some help making the best decision about how to deal with your debt, call a Credit Counsellor and make an appointment at 1-888-527-8999 or email email@example.com Their help is always free, non-judgemental, and completely confidential.
START the MONEY SMART CHALLENGE TODAY by ANSWERING this QUESTION:
Money Smart Week 8 Question: Did you know about these Credit Counselling services and how might it benefit you to talk to a Credit Counsellor ?
Now, What Do I do?
Email your answer to the Money Smart Week 8 Question and your full name and mailing address to firstname.lastname@example.org
Your name will automatically be entered into a draw for a Samsung Galaxy Tablet. (a $300 Value!)
You can enter your name once each week for a total of 17 chances to win! Answer the question anytime before the end of the Challenge on May 28, 2017 and your name will be entered into the draw for a Samsung Tablet.
So, If you missed answering any of the questions for the previous week, go to those weeks and answer the question(s) now.
(NOTE! Only residents of City of Camrose and Camrose County are eligible for the draw for the Samsung Galaxy Tablet.)