Get Debt Help (Everything You Need To Know)

Reviewed by
A Licensed Insolvency Trustee
on August 5th, 2021 12:04 pm

Navigating through your current financial situation alone makes life harder. Like most Canadians, you probably did not receive any form of financial education or debt management in your home. 

Besides, most schools don’t teach money management. Here is part of the reason a lot of people are burdened with too much debt and no-so bright credit history. 

In this scenario, it becomes easy to see why a good number of Canadians often point to money as the number one source of chronic stress. 

Though the main causes of financial problems are different for many Canadian, almost everybody has one thing in common. We all are in need of financial freedom. Unfortunately, this cannot happen if you don’t find a feasible way to get out of debt first. That’s what debt help is all about. 

Types of Debt In Canada

 Before you begin to seek debt help services in Canada, it is important to understand the main types of debt. From there, you can get on the right track to identify the solutions best suited for your financial situation. This is the part of becoming debt-free even when you think your credit score is too bad. 

Student Loans

This is one of the most common types of debt. It is a form of credit incurred during the course of financing your education. Unfortunately, the ironic thing is that the same education taken on loan doesn’t educate people enough on how to secure their financial future. If the opposite is the case, nobody will be looking for where to borrow money for debt consolidation or servicing. Just think about it. 

Business Loans

The sole purpose of starting or running a business is to earn profit. But that pursuit of profit, too many uncertainties abound. 

No matter how hard business owners try to avoid bankruptcy, some people will still fall into this trap. In some cases, no amount of debt consolidation loan will get you out of the situation. 

Mortgage Loan 

Did you take any mortgage loans because of the affordable monthly payment and low interest rate value propositions? 

Well, we all know that change happens. Yes, it’s easy to sign up for this type of loan when your finances are in good shape. But when things go on the opposite side of our expectations, having the money to keep paying becomes a big problem. 

Credit Card Debt 

The burden of financial bankruptcy experienced by many Canadians is a direct result of reckless and cumulative credit card debt. 

The reason is stress-free access to consumer credit. It is the largest chunk of consumer debt in Canada. In case you are facing this challenge now, it might be helpful to seek the debt relief services of a certified credit counsellor. 

Understanding Your Credit Score In Canada

Depending on the credit counsellors you talk to, a typical debt relief program usually involves the use of your personal information to determine if you are eligible for certain solutions or not. Your personal credit score is one of the most important pieces of information. 

Generally measured between 300 and 900 in Canada, it is a number used to determine the creditworthiness of an individual. 

Depending on your standing, this information can be used to make decisions on the approval of your rental application, credit card application, and debt consolidation loan. In addition to these things, it helps lenders to determine your debt repayment capability before granting new credit. 

In Canada, it is generally believed that a score between 630 – 800 is a good one. However, the important thing is to have your current status and different types of debt clarified before seeking the best suitable debt relief options. It is one of the key steps recommended by experienced counsellors on how to become debt-free in Canada.

But why is that important you may ask? 

One reason is that your current credit report may be different from what the scoring agency has on its record. When there is a mismatch, it may be slightly impossible to get the best suitable debt solution you need. 

Getting Started With Debt Help In Canada

As noted earlier, navigating through your financial situation is a heavy burden you don’t have to carry alone. But first, you need to have a better level of clarity regarding where you are before seeking a suitable debt solution. 

  1. What type of debt are you struggling with? 
  2. Where are you at the moment in terms of debt repayment? 
  3. Now you want to get out of debt, what are your biggest challenges?

These things ought to be clarified in order to find the best debt relief options within your reach. 

Below are some of the proven ways on how to get out of debt in Canada. Regardless of how hard you have struggled to become debt-free, taking these steps will get you close to your financial goals. 

Your Debt Relief Options

#1: Get A Credit Counsellor 

In practical terms, credit counselling will put you back on track towards improved management of your finances. Through the professional guidance provided by credit counsellors, you don’t have to endure chronic financial stress that tends to threaten your sanity. 

Maybe you are yet to see the warning signs, but this kind of stress can lead to some life-threatening risks. An experienced credit counsellor can do an amazing job including the following. 

  • Plan and negotiate a lower interest rate 
  • set up a plan for regular payments 
  • Prevent paying more money than is necessary for your current status
  • Analyze the best debt solutions suitable for your particular situation 
  • Improve your personal debt management skill and experience 

The best part is that you can even start with no obligation consultation. These are some of the reasons you should consider debt counselling as the first step towards becoming debt free. 

#2: Explore The Benefits of Debt Consolidation 

With a practical debt consolidation plan, you may have what it takes to get out of debt in Canada within a short period. Don’t be like some other people who think that bankruptcy is the only way to get the debt relief you are seeking. But first, what is debt consolidation? 

It is a process of organizing different types of debt into one manageable monthly payment plan. 

Such debt may include things like secured credit card bills, mortgages, and student loans. Debt consolidation is one proven money management practice that promises lower monthly payments. 

While taking how much money you owe into account, an experienced credit counselling expert or financial planner can help you experience the debt relief benefits of consolidation. 

Somehow, you may be qualified for a debt consolidation loan in Canada. But if you don’t realize it, you’ll end up paying the highest interest rate. Interestingly, this is one of the things a credit counselling session will help you to discover. 

#3: File For Bankruptcy 

Bankruptcy is a process for a legal entity or an individual to seek debt relief by assigning non-exempt assets to creditors in exchange for debt cancellation. In Canada, the process is regulated through the Bankruptcy and Insolvency Act 1985. As part of the process of conforming to this act, all filings must go through licensed insolvency and bankruptcy trustees. 

Technically, the role of a trustee in the legal process is to ensure that the debt relief conditions are reasonable and acceptable to both the debtor and creditor. Again, this is where the financial education provided by debt relief experts can make a big difference. 

Engage with a bankruptcy trustee (now a Licensed Insolvency Trustee) in Canada and get help.

Though a lot of people consider bankruptcy to be the last resort for getting back on track, that may be the solution you need to have a fresh start. When you don’t have enough money to take on a debt relief program with low-interest rates, bankruptcy might be your best option. 

With this option, you’ll be on your way to experience great benefits like –

  1. Cancellation of debts that threaten your peace of mind 
  2. Prevent wage garnishments
  3. Avoid undesirable and unexpected collection actions 
  4. Gain freedom from debts that limit your financial progress 
  5. Get on the path to a better financial future 

#4: Consumer Proposals 

A consumer proposal is a debt settlement agreement filed through a licensed insolvency trustee for the purpose of specifying repayment terms acceptable to a debtor and creditor. When you are overwhelmed with debt and apparent inability to pay, a consumer proposal could be one of the best relief options within your reach. 

It is one of the best alternatives to bankruptcy in Canada. Unlike bankruptcy, your assets will be protected if you take the consumer proposal option. The key thing about this kind of debt relief program is that it takes into account your current financial situation as opposed to your status or ability when you committed to the debts. 

If you succeed in getting the approval, the debt you’ll be paying on a renegotiated schedule will be lower than what you owe now. 

Types of Debt Supported In Consumer Proposals 

In Canada, the following are the major types of proposals supported in a consumer proposal. This is based on the data about proposals approved for many other Canadians like you. 

  • Credit card debt 
  • Payday loans 
  • Overdrafts
  • Tax debts 
  • Unsecured lines of credit 
  • Bank loans
  • Certain student loan debt 

#5: Commit to Consistent Financial Education

The lack of financial education is one big factor that influences the vulnerability of many Canadians when it comes to living in the debt trap. This kind of lack often results in bad spending habits and cumulative growth of bad debts. Though the solution to this problem might be within reach, not many people are taking it. 

It doesn’t matter the type of debts you are struggling with. Improved financial education will lead to a direct improvement of your relationship with money. 

But then, you have to make a commitment first. From there, you can begin to plan the level of consistency required for the type of outcomes you want to experience. One thing you’ll notice if you do a little research is that a lot of companies and experts within the finance industry now provide free and premium educational offers. 

For some of these, you can be taking online classes or listening to high-value content from the comfort of your home. 

Besides debt management, below are some of the things you’ll learn. 

Benefits of Financial Education

  • Learn new effective ways to save money
  • Discover better money management practices
  • See how budgeting can help you take control of your finances 
  • Uncover some of the financial leakages in your daily habits 
  • Learn how to set and accomplish your financial goals 

If you look at your debt status very well, it is possible to discover some of the bad practices that kept you stuck for a while. From there, you can start looking deeper to see the difference that consistent financial education will make in your life. 

Conclusion

Getting knowledge is one thing. Putting that knowledge to work is an entirely different challenge. At this point, if you have acknowledged the fact that doing exactly the same thing you’ve always done with your money won’t get you anywhere, now is the time to think differently. 

Instead of walking the mile alone, an experienced expert will help you with the kind of debt help that will fit your particular situation. As noted earlier, a simple, free consultation with an experienced Licensed Insolvency Trustee in your area is the only thing you need to start now.