Debt relief

When Should I Seek Debt Relief?

There are times in our lives when we find ourselves coming up short at the end of the month and wondering ‘How are we going to manage until next payday?’. Then payday arrives and we get back on track…at least until the next time it happens.

If ‘the next time’ seems to happen more often these days, then it’s probably time to sit down and take a hard look at what is going on with your finances. Maybe it is time to get some debt help. Be honest with yourself in regards to the question: When should I seek debt relief?

How much do I owe?

The first thing to zero in on, is to figure out how much you owe. Making a list of all your debts, the total amount you owe to each creditor, the minimum monthly amount required to be paid each month, and the interest rate being charged will help you to create a plan to pay down your debts.

Who do I owe?

Your list of debts may include:

  • Mortgage
  • Vehicle loan
  • Credit card balances
  • Lines of credit or personal loans
  • Payday loans
  • Income taxes
  • Student loans
  • Spousal or child support
  • Utility bills

Once you know who you owe, you can decide how to prioritize your payments.

By keeping up to date on your secured mortgage and vehicle loan payments, you will be able to keep living in your home and continue to have the use of your vehicle. If you are not able to keep to date on these payments and you cannot make arrangements with the secured creditors, then they have the right to repossess the assets.

When prioritizing who to pay, it is also important to keep up to date on spousal and child support payments. Missing support payments can have dire consequences, such as wage garnishment, attachment to income tax refunds and Employment Insurance Benefits, and the suspension of your Drivers’ License and Passport. The Court may also impose fines and assess payment of the legal costs of enforcing support orders or agreements and may even order jail time.

Financial Danger Signals

There are a number of financial danger signals that come up and we may not recognize them as being an issue or we may believe it is a short-term problem that we can resolve ourselves. Here are a few financial danger signals to watch out for:

  • your bank account is always in overdraft;
  • you are borrowing funds or taking cash advances on credit cards to make ends meet;
  • you are using credit cards for purchasing necessities;
  • you are making interest-only or minimum monthly payments on credit debts;
  • you are receiving collection calls from creditors threatening legal action;
  • utility companies threatening to cut off services.
  • your wages have been garnished;
  • your vehicle is being repossessed;
  • your house is in foreclosure;

If you are experiencing one or more of these financial danger signals, it is something that is likely not going away on its own. They can cause additional stress if you don’t take action to deal with it before it snowballs into a bigger problem.

The consequences of having an interruption in your cash flow because of a wage garnishee or the inability to get to work because your vehicle has been repossessed can be very stressful.

These dire situations can be avoided by recognizing the financial danger signals that are going on and dealing with them right away. A Licensed Insolvency Trustee (formerly Bankruptcy Trustee) can provide information on how to deal with your specific situation, how to protect what you have and ensure you are making the right choices when prioritizing payments to creditors.

Who can help?

As we live in a free market society, there is no shortage of organizations offering debt relief programs. In addition, there are several terms that can be confusing such as debt settlement and credit counselling. Further, there are Government of Canada debt relief programs available via Licensed Trustees.

We think that it is important to be able to meet face to face with someone that is local. That is the best way to ensure you are not being scammed.

What is vital, no matter what program you go with, is that your cash flow in the future is sufficient to make life work and you are not paying too big of a payment towards your debt. In that regard we strongly recommend that you get some feedback from a Licensed Insolvency Trustee office.

When do I take action?

Good advice is to always take action sooner rather than later when it comes to financial insolvency.

The ongoing pandemic has negatively affected the cash flow in many Canadian households. When folks are having difficulty meeting their regular cost of living expenses as well as servicing their other debts, it is time to seek out a Licensed Insolvency Trustee (That’s us!).

There is no need to wait for collectors to start calling or to be missing payments. Generally, if your debt is not going down with your normal payment then it is time to call.

A Licensed Insolvency Trustee has the knowledge and expertise to take a look at your overall financial picture and provide you with detailed information on the options that are available to you. You will then be able to make a well-informed decision on the best course of action to take.

The majority of people advise of feeling immense relief once they have made the decision to take action and they have started the process that puts them on the road to financial recovery. Make 2022 the year to become debt free. Give us a call, we are here to help!

D. Elinor Warner

I have been working in the insolvency field for over thirty years! I continue to enjoy the daily variety the day brings and the opportunity to increase my knowledge with mandatory professional development courses. It has been a pleasure to assist people in financial difficulty navigate the insolvency process of their choice and see them achieve the fresh start they are looking for. Over the years I have volunteered time with various organizations in the community. I also enjoy listening to a variety of music and attending concerts, as well as reading, cooking, gardening, travel, and spending as much time as possible with my two children, her extended family and friends.