Living with debt constantly hanging over you can be stressful, overwhelming, and can be holding you back from moving forward with your financial goals. It can also contribute to or worsen physical and mental health problems. Whether you’re self-employed, a student, retired, or working full time, living under the shadow of debt and financial stress has serious effects on your health.
Knowing your options is an important step towards financial recovery and a fresh start, unfettered by your previous debt.
Most people would like to explore non-insolvency options before considering a consumer proposal or a bankruptcy. If you’re unable to overcome your debt simply by adjusting your budget or increasing your income, here is a summary of other options:
Finance companies
often offer debt consolidation plans at very high interest rates. They will sometimes hold personal items as security which can result in the loss of those items if you fall in arrears of the required payments. Review all provisions of these lenders very carefully before you sign any agreements.
Home equity line of credit (HELOC)
If you own real estate and have more equity in your property than the debt you’re trying to deal with, consolidating your unsecured debt by refinancing your mortgage or by applying for a home equity line of credit (HELOC) is an option well worth considering.
A credit card balance transfer
is another option if your main source of debt is a credit card. Many cards have low or zero interest offers for balance transfers (for a specified period of time, i.e. the first three months), which can help you get a head start on paying back the principal debt if you’re able to pay substantial amount during the low/no interest period.
Debt Management Plan
Credit counsellors can help negotiate a Debt Management Plan. While not binding on all creditors like a consumer proposal, a debt management plan attempts to have your creditors agree to lower or freeze interest on your debt while you make a monthly payment to the credit counsellor, who then distributes the funds to the creditors.
Equity lenders
are companies that lend funds and take security for the loan, usually a vehicle that you own which doesn’t already have a loan attached to it. These are usually high interest loans, and if payments are missed they will take action and seize the vehicle.
As Licensed Insolvency Trustees (LITs), we assist you to consider all your options, not only the ones that we provide. In some situations, it may be that one of these options is your best way forward, and we’ll discuss this with you. While we do not provide these services, we can help guide you in the right direction.
