The burden of debt can weigh heavily on you – which is probably why you are reading this right now. The good news is that you’ve already taken a big step to dealing with your debt – you’ve started looking for Kenora debt solutions. In this article, you’ll learn about the range of options available to you, helping you make the best choice. You’ll soon feel the weight of debt lifting from your shoulders.
Why do you need debt help?
According to a September 2018 survey by the Canadian Payroll Association:
- 40% of Canadians feel overwhelmed by their debt
- 33% of Canadians have seen their debt increase over the last year
There are many reasons you might be suffering from debt stress. Understanding the cause of your debt is important. This knowledge helps you to design the best debt solution for your situation. Common reasons for overwhelming debt include:
1. A reduced income
You may have lost your job or had your hours reduced. Bonuses and commissions may have been cut. Perhaps your partner has suffered an illness and can’t work, and now you are surviving on a single income.
2. Divorce or separation
Divorce puts a financial strain on both parties, especially if children are involved. Suddenly there are two homes to pay for, and each partner is responsible for any joint debt. If one partner is responsible for paying child support, this creates an even bigger financial hurdle.
3. Ill health
A period of illness could cause your income to fall, and make it difficult to meet your expenses.
4. Payday loans
If you have suffered a financial emergency – perhaps your heating needed repairing, or your car broke down – you may have borrowed to pay the bill. If you forget to make the payment, or another unavoidable expense comes along, your debt can spiral – especially if the source of debt is a payday loan.
Personalizing Kenora debt solutions
Debt options that work to help relieve financial stress include:
1. Credit counselling
Credit counselling could help you with money management, budgeting, and long-term financial planning. It is unlikely to solve a debt problem that is already in crisis, but it may help get your finances back on track and keep them healthy after your debt stress has been solved.
2. Debt consolidation
The idea behind debt consolidation is to replace your existing debts with a single loan at a lower interest rate. Making one payment instead of several is easier to manage. A lower interest rate will cost you less. However, the amount you owe will be the same, and it only works if you are able to turn high-interest debts into a lower interest debt. If you cannot afford to continue to make payments, debt consolidation will not work.
3. Consumer proposal
A consumer proposal offers several benefits. For example:
- Your monthly payments will be determined by your ability to pay — that is, what you can afford to pay over a set period of time, to a maximum of 5 years.
- If you cannot pay the total amount you owe, your debt can be reduced significantly — even by as much as 90%. Regardless of the percentage you pay, 100% of your unsecured debt will be eliminated by the proposal.
- Your assets are protected.
Consumer Proposals can only be handled by a Licensed Insolvency Trustee (LIT). Your Trustee will first sit down with you to determine if a proposal will work for you. Consumer Proposals only work when you can afford to make some kind of payment, and when you have either a long term secure source of income or a one time outside source of a lump sum payment. Once you and your Trustee have determined that a proposal could work for you, how much you can afford to pay monthly, and for how long, the Trustee contacts your creditors with the proposal. Your creditors then have the opportunity to vote for or against the proposal. Once it is accepted by a majority of the creditors, it is binding on all of your creditors.
Generally, you are required to offer the creditors more than they would receive if you filed for bankruptcy, but, within that requirement, you can offer an amount that works for you. Your LIT will have the experience needed to guide you as to what your creditors are likely to accept. The monthly payments will be within your family budget. You will make monthly payments to the Trustee for the duration of the proposal. When all of the payments are completed, within the proposed time frame, your remaining debt is extinguished.
If you can afford monthly payments and have non-exempt assets to protect, a Consumer Proposal may be the best solution.
4. Personal bankruptcy
As we discuss in our article, “How bankruptcy help today can make for a better tomorrow,” filing for bankruptcy could be the restart you need. Your unsecured debt will be eliminated, and you can start again with a clean slate.
Contrary to popular belief, you won’t lose everything. In personal bankruptcy, many of your assets are protected from your creditors.
The Ontario Execution Act sets out those things that are exempt from seizure by creditors. It includes all of your clothing and that of your dependents, also furniture and household appliances up to a value of $13,150, as well as tools and property that you need to earn a living, up to the value of $11,300. Likewise, also exempt are one motor vehicle up to the value of $6,600, and equity in your home IF it is less than $10,000. Your pension, as well as any RRSPs and RIFs, are exempt, except contributions made within the last 12 months. NOTE: each province has an Executions Act or similar legislation, and the exemptions are different from province to province. These are Ontario exemptions only.
What do you need to do?
Debt doesn’t have to be the burden it is today. You can take control of your debt and get your life back on track, but it’s difficult to do on your own. For more than 30 years, LCTaylor has been helping Canadians navigate their finances. We offer our help with debt solutions in Manitoba and Northwestern Ontario, including Kenora.
As Licensed Insolvency Trustees, we have the experience and know-how you need. We’ll talk to you and discover all we need to know about your finances. We’ll learn what is important to you and understand how you got to this point. Then we’ll work to find a solution to your unique situation.
You’ll find our offices are easy to locate in Winnipeg and Kenora. Debt solutions that we will discuss with you are many and varied. This article will give you an idea of just how many options there are available to you, and the breadth of help that you can rely on from LCTaylor.
For a free and confidential consultation to discuss your financial situation and develop a personalized debt solution with options that work, contact the Licensed Insolvency Trustees at LCTaylor.