Many people are aware of the damage caused by debt much too late. This awareness will normally push you to consult an accountant who will tell you to go to a licensed insolvency trustee (formerly called a trustee in bankruptcy).
Even if friends give you advice that you think is appropriate, do not take your situation lightly.
The goal remains to avoid bankruptcy. It will devour some of your assets and you will lose your property seizable.
When the only options available to you are through a licensed insolvency trustee, it is because your finances are suffering greatly and your situation has become urgent.
These experts are professionals who will guide you in the right direction.
But what are you left with as solutions?
Usually, 3 very practical methods can get you out of trouble.
- Consolidating your debts by refinancing
- The informal proposal
- The consumer proposal
Let’s see them after setting your budget.
Establish a budget to choose which of the 3 methods you will need to stop your debts
Take a few moments (if you have not already done so) to list your assets (your family income) and liabilities (your monthly expenses, including credit cards).
Do not forget these expenses related to the outings and the passengers’ pleasures (restaurants, alcohol, cigarettes, etc.).
Seeing these numbers well organized in front of you, ask yourself the eternal question: “Is it possible to make changes? “
Here are some ideas that might help you:
- Set achievable goals to give you a chance to reach them.
- Subtract unnecessary expenses or stop some addictions that squander your assets (if you smoke, if you drink, if you play, etc.).
- Can you change some eating habits or transportation?
- Repeat this activity regularly.
If it is clear that no change will improve your lot, you will be able to inform yourself of 3 effective methods to get rid of your debts.
Be aware that responsible homes will usually keep very tight accounts and calculate each expense, as simple as it may be.
Many software exist (some are even free) that allow households in Quebec to keep their accounts.
Give yourself a financial rigor to calm your budget!
The first solution: debt consolidation
In fact, as soon as the first symptoms of indebtedness appear, that is to say postponements of deadlines, cuts on the grocery budget, the addition of unpaid accounts and the famous loan to your brother-in-law or your friend, do not wait for the irreparable!
Consolidate your debts under a creditor and free yourself immediately from the impossible constraints of all these high interest payments.
Debts have the capacity to drown any household if they accumulate dangerously. The burden of over-indebtedness will even make members of a family so anxious that the atmosphere will become heavy and unhealthy.
If you find yourself at a crossroads and feel the abyss of indebtedness that attracts you, debt consolidation reaches out to you.
CHARACTERISTICS OF CONSOLIDATION OF DEBTS
Definition of debt consolidation:
Include in one place all your debts (regardless of their duration and their interest rates) in order to have only one creditor. This will normally be your financial institution.
Why opt for debt consolidation?
This method is well liked by people suffering from over-indebtedness because they drastically lower their interest rate, thus saving thousands of dollars. Who does not need to see his monthly payments go down to breathe more freely.
Sometimes debt consolidation stretches for many years to facilitate repayment.
Your debt will remain the same, but your payments will decrease, which will greatly benefit you. In addition, since your former creditors will no longer have grievances against you, you will avoid their incessant calls and their latest opinions.
When you redeem credit in this way, you engage closely with your bank to pay that debt to it. It is customary that it forces you to cut your credit cards to prevent you from falling into irresponsibility.
BE NOW PRUDENT
If you succeed in using this method, take the time to rebalance your budget and impose clear restrictions. Why not decide to put a portion of your income in savings products to prevent unforeseen events in your future?
Since the goal is to get a credit favoring you, it may be wise to take the time to shop the banking institution with whom you will do the trick.
In some situations, refinancing will help you breathe better. By refinancing, we usually talk about a new mortgage on your house.
Note that to qualify for debt consolidation or mortgage refinancing, one thing will come into play: your credit report (or a good endorser).
The indebted Quebecer who wants to claim the consolidation of his debts must prove that he is strong enough to guarantee his future payments. By putting your mortgage on the line or asking a co-borrower to sign with you, you will certify to your bank that this will benefit them.
HOW TO IMPROVE YOUR CHANCES?
If the bank refuses to serve you, then it is time to consult a licensed insolvency trustee . It is also advisable to go directly to a trustee when you think you have recourse to a consolidation of your debts.
Because a financial institution will never give you a present. It will give you refinancing only backwards because it loses money in the long run. However, she does not want you to go elsewhere.
Put the odds on your side by hiring an experienced intermediary.
The second solution: the informal proposal
In certain circumstances, a bilateral agreement with your creditors will solve your financial problems. This informal proposal will coordinate your monthly payments differently to allow you to repay everyone.
You will get the same result as a debt consolidation without having to beg the bank for a huge amount of money.
THE DETAILS OF THE INFORMAL PROPOSAL
Definition of the informal proposal:
This agreement between your creditors (1 or more) and you must previously be negotiated with them to enable you to pay your debts without having to resort to bankruptcy.
Why choose the informal proposal?
This legal way to solve your financial problems has the particularity of going through a negotiation with your creditors. You try to soften the impact of these monthly payments by reducing the interest rate or extending the duration of your payments.
When this measure is prepared by a licensed insolvency trustee, it will have a very high percentage to be accepted. Sometimes an informal proposal will reduce your debts by half!
HOW TO PREPARE AN INFORMAL PROPOSAL?
Go to a licensed insolvency trustee to first make a list of all your creditors. Since your debt consolidation has failed, you will turn to the trustee to find a second solution.
Every month, if this proposal is passed, you will pay a predetermined amount to your trustee in bankruptcy. Do not be afraid ! This monthly payment will be based on your income and your repayment capacity.
The third solution: the consumer proposal
This powerful solution will, in many cases, finally give you the chance to breathe.
However, to qualify for the consumer proposal, certain criteria must be met. First, you will choose a trustee in bankruptcy who will act as an intermediary between the creditors and you.
When everything is settled, you will only have one contact: the trustee.
THE STRENGTHS OF THE CONSUMER PROPOSAL
Definition of the consumer proposal:
With the help of a trustee in bankruptcy, you prepare an offer to your creditors. If accepted, the consumer proposal will give you the chance to free you from a large portion of your debts. Your monthly payments will go to the trustee afterwards.
Why use the consumer proposal?
This resolution will often allow you to avoid bankruptcy. It is attributed to a person who collects less than $ 250,000 in debt (you do not add the mortgage in this equation).
In vogue since it sometimes relieves you of 70% of the indebtedness that stifles you, the consumer proposal usually targets companies that are in financial trouble. Fortunately, it can also apply to individuals.
This government-provided method gives you the means to negotiate an agreement that, in addition to significantly reducing your debts, will extend your payments over a longer period. The goal remains the end of your debt once and for all.
WHAT PRICE DO YOU PAY FOR THE CONSUMER PROPOSAL?
Your payments will be modeled according to your monthly income and the stability of your budget.
WHY DO CREDITORS ACCEPT THIS MEASURE?
Since the consumer proposal is the last chance for you to remain solvent, they are aware that your next step will be bankruptcy. In this case, they may very well not receive a penny.
Of course, your attitude during the process will largely determine the final resolution. If you are knife-fired with your creditors, they could simply refuse to see you heading for personal bankruptcy.
CONSUMER PROPOSAL FOR A COMPANY
Above all, you will need to take stock of the forecasts month by month and put the trend of your cash on paper. In doing so, this assessment will prove to the trustee and your creditors the viability of your offer to them.
Call on a licensed insolvency trustee to handle cases like yours on a regular basis to give you the best of luck.
If the consumer proposal is ratified by the different parties, you will have to restructure from A to Z the finances of your company to protect it from bankruptcy.
Experts will analyze your finances: do not succumb to your debts!
We are a tool that connects consumers (looking for solutions to get their finances back on track) and experts in the field.
By filling out the form on this page (it will only take 2 minutes), you will have a network of qualified financial advisors and insolvency trustees who will focus on your problem.
You will finally be able to get answers to all your most advanced questions and discover possible solutions to your financial problems.
The goal is to say goodbye to debt once and for all!