Debt Relief BC – Real Debt Solutions To Help With Your Debt Problem

As a Licensed Insolvency Trustee office, we regularly meet with people and are witness to  the overall strain created by too much debt.

Debt can be a heavy burden, weighing down on your relationships, mental health, and overall well-being. If you’re in British Columbia (BC) and struggling with a debt problem, it’s crucial to know that you’re not alone and that there are options available to help you regain control of your financial situation. In this article, we’ll explore what is available for debt relief in BC and which ones are real debt solutions to help you with your debt problem.

While there is no direct government financial aid for paying off debts, the Canadian Government does provide a debt reduction program for Canadians via a Consumer Proposal which is discussed below.

One of the first steps in addressing your debt is to understand your financial situation fully. This includes taking stock of your income, expenses, assets, and debts. Knowing where you stand financially will help you determine the best course of action for debt relief. It will also be helpful to get this information organized to be ready to talk with a Licensed Insolvency Trustee. As the saying goes, you need to measure first before you cut.

1. Debt Consolidation

For many people in BC, debt consolidation is a viable option. The ideal debt consolidation loan involves combining multiple debts into a single loan with a lower interest rate. The best place to start this process is with your own bank or credit union. They should know you best and may prove to be quite helpful if most or all of your debt, such as credit cards and lines of credit, are held at the branch.

A debt consolidation loan can help simplify your finances and reduce the total amount you pay each month, making it easier to manage your debt. However, sometimes it can be difficult to qualify for and you need to pay close attention if the monthly payment will provide enough relief to your budget.

At the end of the process, you will have paid back 100% of your debt plus bank interest on the consolidation loan.

Pro tip : be careful about getting a consolidation loan from anywhere other than a bank or credit union as a third party lender will likely have super high interest rates.

Another way to access a debt consolidation loan is to roll it into your mortgage if your property has enough equity in it. The lender will be able to use your house as collateral thereby qualifying you for the loan. In these cases, a mortgage broker can be very helpful.

2. Debt Management Plan or Debt Settlement Plan

Another option for debt relief in BC is a debt management plan (DMP). A DMP is a structured repayment plan negotiated with your creditors through a credit counselling agency. This plan typically involves lower interest rates and monthly payments, allowing you to pay off your debts more efficiently. Some creditors may not participate so you could face continued collection pressure including lawsuits and a wage garnishee.

If you’re unable to repay your debts in full, you may consider a debt settlement arrangement. Debt settlement involves a company negotiating with your creditors on your behalf to settle your debts for less than the full amount owed. While debt settlement can help you get out of debt faster, it can also negatively impact your credit score.

It can be difficult to discern whether a debt settlement company is legitimate or even Canadian. Also, we would recommend getting very clear information on what fees you will be charged.

3. Consumer Proposal

A Consumer Proposal is the only debt relief program approved and regulated by the Canadian Government. It involves making an interest free offer to your unsecured creditors to pay back a percentage of the debt owed over time.

This has become the most popular way to consolidate debt right across Canada.

A Consumer Proposal can only be administered by Licensed Insolvency Trustees (LITs) who are licensed and regulated by the Federal Government.

Once in place, your payments to unsecured creditors stop and you usually make one affordable monthly payment to your LIT who holds the money in trust until it is distributed to your creditors.

From your scheduled payments, the Canadian Government allows the LIT office to keep some of the funds for fees. In other words, there is no secondary payment for fees. Unlike other options, the fees are regulated by the government for the protection of the public.

We often see Consumer Proposals approved for payment terms of 20% on the dollar owed. Creditors agree to it because it is structured to provide a slightly better recovery to them than they would otherwise get in a Bankruptcy.

A Consumer Proposal is the only way that Canada Revenue Agency can agree to settle for less than what is owed.

4. Bankruptcy Protection

For those with overwhelming debt and no means to repay it, Bankruptcy may be the best option. Bankruptcy is a legal process that allows you to eliminate your debts. While Bankruptcy can provide a fresh start, it should be considered as a last resort.

In certain circumstances, Bankruptcy can be the fastest least expensive way to get out of debt.

Filing for bankruptcy can protect your from:

• Credit card debt
• Payday loans
• Lines of credit
• Income taxes
• Student loans – so long a you are out of school for 7 years
• Mortgage shortfalls
• Installment loans
• ICBC debts

5. Do it Yourself

In addition to these debt relief options, there are also several strategies you can use to manage your debt more effectively. These include creating a budget, cutting unnecessary expenses, and increasing your income through additional work or side gigs.

We find that debt and financial matters have a momentum of their own. By taking control and finding out information about ways to deal with your debt, you are starting the process of changing the momentum.

Which Debt Solution Option is Right for You?

It’s important to note that debt relief  in British Columbia will vary depending on your specific financial situation and monthly cash flow. Therefore, it’s recommended to seek advice from a Licensed Insolvency Trustee who can help you explore the best debt relief options for your situation. At Chase & Associates we offer a free initial assessment where you can gain useful information about what might be the best way forward for you.

Second Pro Tip: if you are not dealing directly with a LIT, be very careful about paying someone for debt consulting services. That consultant may simply chat for a bit and then pass you onto a LIT office. Why pay for that?

Conclusion

In conclusion, debt relief is possible in BC, and there are real solutions available to help you overcome your debt problems. Whether you choose debt consolidation, a debt management plan, debt settlement, Consumer Proposal, or Bankruptcy, there will be a solution for you and your family.

Here are some critical questions to ask :

• What will my monthly finances look like after I start the option I have chosen?
• Will I have enough money to live or will I still be too stretched?
• How much is the monthly payment? Can I make that lower?
• Will all debt be covered?
• Will any creditor be able to continue to collect?

Ultimately, you want relief from all your unsecured debts at a monthly payment that fits your budget.

Here at Chase & Associates, we have years of experience looking at different situations. As Licensed Insolvency Trustees, we aim to provide clear and unbiased advice to help you move forward.

Take advantage of our experience by contacting one of our convenient offices today.