What to do……

September 22nd, 2008 by Questions

I`m a full-time (seasonal) worker. My hours will probably start getting lower. I`m in debt and want to get a fresh start with my life. The only problem is, is that i owe money on credit cards that are over the limit, i took out a loan to pay them off and instead of getting rid of the cards, i used them up again and now have to pay these and i`m finding it hard to do so. I`m getting phone calls almost on a daily basis….What can i do? Is claiming personal bankruptcy the only option?
Please help!!! I`m getting extremely stressed out over this! I know I was wrong in accumulating these debts but am now realizing that i should seek some professional help.
Thanks

Posted from: Ontario

Questions

One Response to “What to do……”



, Barton Goth - Goth & Company Inc. - Bankruptcy Trustees said:

The options that we suggest people consider when they are experiencing financial difficulty include:

1) A Debt Consolidation Loan – you approach a bank or other lender and apply for a loan to repay all of your existing debts. This solution is the only one listed here that will not adversely affect your credit rating. The advantage of a consolidation loan is that the interest charged is generally significantly lower than credit card interest rates. If you apply for a consolidation loan at a bank and your application is turned down that means the lender thinks you have accumulated more debt than you can reasonably be expected to handle.

2) Credit Counseling – a voluntary program where your debts are pooled together (they aren’t actually paid off) so that you are only required to make a single monthly payment to a non-profit counseling agency. As you make your payments the agency forwards funds to each of your creditors in proportion to your total debt. The advantage of this procedure is that usually the interest on your unsecured debts is reduced to prime or even eliminated. You are required to repay 100% of what you owe, but because of the reduced interest your monthly payment is much lower than all of your minimum payments would have been without the plan.

3) A Proposal to Creditors (also called a Consumer Proposal)- this solution is used by people who cannot afford (or get approval for) a consolidation loan or a credit counseling plan, but don’t want to file bankruptcy. In a proposal you offer to repay a portion (perhaps 100%) of the debt that you owe. Proposals are an excellent alternative to bankruptcy, but they are not well known so I suggest you contact a local trustee and ask them about proposals if you are interested in this solution.

4) Bankruptcy – if none of the other procedures listed is appropriate for you then bankruptcy may be correct solution. The concept behind bankruptcy is that you cannot afford to repay even a portion of your debts. To file bankruptcy you must meet with a trustee in bankruptcy, licensed by the federal government to handle this type of procedure. To find a trustee in your area use the links on the right hand side of the website.

Certain provinces have an additional option for their residents called an Orderly Payment of Debts. When you speak to a local trustee and they will advise you whether or not this solution is available where you live and makes sense for you.

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