What Oil Spills Can Teach Us About Dealing with Debt
Last week I discussed what sunburn can teach us about bankruptcy in Canada. I made the comment that I had met with numerous Canadians in financial trouble who had commented to me about sunburn, and what to do about it. Over the last few weeks I’ve had a lot of people comment about a news event that’s far more serious: the oil rig explosion and resulting “oil volcano” in the Gulf of Mexico in the United States. In my daily work I often find that seemingly unrelated news events play on people’s minds, and it impacts on how they think about their debts.
Sometimes it’s good news, such as my comments on Bankruptcy Lessons from the Stanley Cup Champions from last year. When Pittsburgh won the Stanley Cup in 2009 it was a good news story: a team that was bankrupt came bank and became champions. I had a lot of people comment to me that if a hockey team can recover, so can I. It gave people hope.
The Gulf oil spill is obviously a huge tragedy, but it’s also an event many people can relate to on a subconscious level. When you have more debt than you can handle, it feels like a gushing oil well. It appears to be an impossible situation, with no way to stop it. Obviously trying to stop a gushing oil well more than a mile under water is a very daunting task. But that’s the feeling many people have trying to deal with their debts.
At least once every week someone arrives in my office, and they are overwhelmed by their debts. How can I tell? Because they bring in a stack of unopened mail. Deal with their debts is so scary they can’t even open their mail. They have letters from bill collectors and even from lawyers, but they can’t even face opening the letters to see what’s inside. Like a gushing oil well, opening the mail is hopeless, because they see no way to solve the debt problem.
Here’s the good news: there are solutions. Yes, it may look hopeless, but there are ways to deal with debts.
Many people have debts simply because they don’t have a plan. They don’t keep track of their expenses, and they have no idea where their money goes. The solution is relatively simple. Start by writing down every dollar you spend, and then armed with this information you can make a plan to reduce your expenses and use the extra cash flow to pay off your debts. Make a household budget, and get started.
Of course personal bankruptcy in Canada may be a possible solution. Your debts are eliminated, and you get a fresh start. In my experience bankruptcy is the correct solution for some people, but not for everyone. Many people are afraid that bankruptcy is an admission of failure, and so they would rather put up with the collection calls and wage garnishments than go bankrupt.
Fortunately, there is another option. There is a legal procedure that deals with your creditors, but you don’t have to declare bankruptcy. It’s called a consumer proposal. In a consumer proposal we negotiate a fair settlement with your creditors, and your unsecured debts (like credit cards, lines of credit, and even tax debts) are eliminated.
How do you stop debt that’s gushing like a broken oil well? For many people, a consumer proposal is the answer.
If you feel that your debt is more than you can handle, but you no longer want to ignore the problem, contact a consumer proposal administrator, or a bankruptcy trustee, to arrange a no charge initial consultation, and find a way to permanently deal with your debt problems.
I like the analogy… at times our families expenses got out of control.. we just weren’t paying attention… at other times we got over our heads and then out of control… each time we lost control of our spending.. it took months and excrutiating effort to bring things back into control… and as you mention for some, bankruptcy is the only alternative.. especially in this overleveraged economy