Your
options
Once
you have determined your ability to pay
your debt, you can begin to think about the options available to
you. During your free initial consultation, we will ensure that
you have a clear understanding of each option, and why we
recommend one option over another based on your individual
circumstances.
Increase
income
Consider
a second job, having non-working family members start to work, or
renting out a suite in your home.
Decrease
expenses
Obtain
a roommate, decrease your entertainment expenses, eat out less,
car pool, and so on.
Consolidation
loan
This
alternative should only be considered if you are confident that
you can afford the monthly repayment amount. Before obtaining a
consolidation loan, you should determine
your ability to pay your debts. If the credit agency is
insisting on personal guarantees from friends or relatives, or
collateral for the loan, you may wish to reconsider this option.
If you subsequently default, you and your co-signor may be worse
off then before obtaining the loan.
Ask
for the interest rate. If the rate is higher than the rates
being charged by your present creditors, the loan may not be a
reasonable option. Consider the monthly payment amount, the number
of months or length of time to pay off the loan, the interest
rate, and the interest component of each payment. Request a
printout of the amortization of the proposed consolidation
loan.
Make
sure you read and understand the loan agreement. Often,
high-risk lenders will take security against your household
assets, thereby protecting themselves in case you default.
Prior
to obtaining a consolidation loan, you should consider obtaining
an opinion from an independent credit counselor – we offer this
advice for free. We can also refer you to an independent credit
counselor or lawyer.
Credit
counseling and debt pooling
Debt
pooling allows you to “pool all of your debt” and make a
monthly payment to retire the full amount of the debt plus a
nominal interest charge. Debt pooling is similar to a
consolidation loan in that you now only make one monthly payment.
The advantage is that usually the interest is greatly reduced, you
are not providing any additional collateral, and no co-signor or
guarantor is required. A debt pooling repayment plan should
generally only be considered if the entire obligation can be
retired in a reasonable time period – usually under five
years.
In order for debt pooling to be successful, it is usually
necessary to obtain credit counseling and eliminate the use of
credit cards in the future. If you choose to pool your debts
and retire your debt in this manner, your credit rating will be
altered to reflect your decision and actions.
Debtor’s
assistance - Orderly Payment of Debts Program (Ph: 604-660-3550)
Normally,
to be eligible for the OPD program, you must be able to pay off
all of your debt in less than five years. Interest will be reduced
to 5% per year. The program will halt garnishments and
creditor harassment. If you decide to pool your debts and
retire the debt in this manner, your credit rating will be altered
to reflect your decision.
Informal
debt settlement
Another
option is for you and/or your financial advisor to negotiate a
settlement on each individual debt. This option is generally only
useful if you have very few creditors or one very large debt and a
few minor ones. You may wish to use our services to facilitate in
the negotiation of the settlement of the debt. Normally, Canada
Customs & Revenue Agency (formerly Revenue Canada) will not
negotiate an informal settlement.
Proposal
to creditors
A
proposal is a negotiated agreement between you and your creditors
concerning your obligation to pay off a portion of your debts,
usually over a period of time. See Proposals
to creditors.
Bankruptcy
Bankruptcy
may be your only viable alternative. However, it should only be
considered after all of the other alternatives have been
investigated. See FAQs
about personal bankruptcy and insolvency.
Download
Personal Adobe PDF Forms (please allow for download time):
Consumer
Bankruptcy Information
Personal
Bankruptcy Questionnaire
Income
and Expense Form
List
of Creditors
Download
Business Adobe PDF Forms (please allow for download time):
Required
Corporate Information
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