9,075
edits
Difference between revisions of "You Have Options for Getting Out of Debt"
Jump to navigation
Jump to search
m
You Have Options for Getting Out of Debt (view source)
Revision as of 01:08, 7 November 2023
, 01:08, 7 November 2023→Work out the problem
m (Elena Renderos moved page When You Can't Pay Your Debts (No. 253) to You Have Options for Getting Out of Debt: change title) |
Drew Jackson (talk | contribs) |
||
| Line 42: | Line 42: | ||
==Work out the problem== | ==Work out the problem== | ||
There are several options for getting out of debt. | There are several options for getting out of debt. | ||
===Option 1. Budgeting out of debt=== | |||
To tackle your debts, you need to understand your financial situation. Your first step should be to list your '''assets''' (what you own) and '''debts''' (what you owe). | To tackle your debts, you need to understand your financial situation. Your first step should be to list your '''assets''' (what you own) and '''debts''' (what you owe). | ||
| Line 77: | Line 63: | ||
We provide more detailed guidance on making a budget. See [https://www.peopleslawschool.ca/everyday-legal-problems/money-debt/getting-out-debt/budgeting-out-debt budgeting out of debt]. | We provide more detailed guidance on making a budget. See [https://www.peopleslawschool.ca/everyday-legal-problems/money-debt/getting-out-debt/budgeting-out-debt budgeting out of debt]. | ||
===Option 2. Negotiate with your creditors=== | |||
First, a caution. Have more than two years passed since you made a payment on a debt or the creditor demanded payment? If so, the creditor may have lost their legal right to enforce the debt. You should seek legal advice before contacting the creditor. See [https://www.peopleslawschool.ca/options-legal-help options for legal help]. | First, a caution. Have more than two years passed since you made a payment on a debt or the creditor demanded payment? If so, the creditor may have lost their legal right to enforce the debt. You should seek legal advice before contacting the creditor. See [https://www.peopleslawschool.ca/options-legal-help options for legal help]. | ||
| Line 84: | Line 70: | ||
We offer step-by-step guidance on negotiating with your creditors. See [https://www.peopleslawschool.ca/everyday-legal-problems/money-debt/getting-out-debt/negotiating-payment-terms negotiating payment terms]. | We offer step-by-step guidance on negotiating with your creditors. See [https://www.peopleslawschool.ca/everyday-legal-problems/money-debt/getting-out-debt/negotiating-payment-terms negotiating payment terms]. | ||
===Option 3. Consolidate your debts=== | |||
Consolidating your debts means combining them into a single payment. There are three main ways to do this: | Consolidating your debts means combining them into a single payment. There are three main ways to do this: | ||
| Line 97: | Line 83: | ||
With a '''debt repayment plan''', you set up an account with a credit counselling agency. You deposit a monthly amount into the account. The credit counsellor uses this amount to pay your creditors until your debt is erased. | With a '''debt repayment plan''', you set up an account with a credit counselling agency. You deposit a monthly amount into the account. The credit counsellor uses this amount to pay your creditors until your debt is erased. | ||
We walk you through each of these options in more detail. See [https://www.peopleslawschool.ca | We walk you through each of these options in more detail. See [https://www.peopleslawschool.ca/consolidating-your-debts/ consolidating your debts]. | ||
===Option 4. Negotiate a debt settlement=== | |||
With a '''debt settlement''', you pay your creditors a lump sum that is less than the full value of what you currently owe. This can range between 20% and 80% of the debt currently owed. (Settlements at the low end of this range are very rare.) | With a '''debt settlement''', you pay your creditors a lump sum that is less than the full value of what you currently owe. This can range between 20% and 80% of the debt currently owed. (Settlements at the low end of this range are very rare.) | ||
| Line 108: | Line 95: | ||
You can get help with negotiating a debt settlement. Non-profit credit counselling agencies offer these services. (So do for-profit companies, some of which don’t have your best interests at heart. So be careful.) | You can get help with negotiating a debt settlement. Non-profit credit counselling agencies offer these services. (So do for-profit companies, some of which don’t have your best interests at heart. So be careful.) | ||
We have in-depth information on debt settlements. See [https://www.peopleslawschool.ca | We have in-depth information on debt settlements. See [https://www.peopleslawschool.ca/negotiating-debt-settlement/ negotiating a debt settlement]. | ||
===Option 5. Make a consumer proposal=== | |||
A '''consumer proposal''' is an offer you make to your creditors to settle your debts. If they accept your proposal, you pay them a portion of what you owe and they forgive the rest. | A '''consumer proposal''' is an offer you make to your creditors to settle your debts. If they accept your proposal, you pay them a portion of what you owe and they forgive the rest. | ||
It’s a formal, legally binding process overseen by a licensed insolvency trustee. It can take up to five years. Some of your assets may need to be sold. We explain the process in detail. See [https://www.peopleslawschool.ca | It’s a formal, legally binding process overseen by a licensed insolvency trustee. It can take up to five years. Some of your assets may need to be sold. We explain the process in detail. See [https://www.peopleslawschool.ca/making-consumer-proposal/ making a consumer proposal]. | ||
===Option 6. Declare bankruptcy=== | |||
'''Bankruptcy''' is a legal process where you give up most of your assets to get rid of your debts. Going bankrupt is a long process with serious consequences. It’s the most drastic option for getting out of debt. | '''Bankruptcy''' is a legal process where you give up most of your assets to get rid of your debts. Going bankrupt is a long process with serious consequences. It’s the most drastic option for getting out of debt. | ||
A licensed insolvency trustee must file an application for you with a government office. The trustee guides you through the process. They sell your assets (except for a few that are exempt) to pay off your creditors. When the process is complete, you’re “discharged” from bankruptcy. [https://www.peopleslawschool.ca | A licensed insolvency trustee must file an application for you with a government office. The trustee guides you through the process. They sell your assets (except for a few that are exempt) to pay off your creditors. When the process is complete, you’re “discharged” from bankruptcy. [https://www.peopleslawschool.ca/declaring-bankruptcy/ We walk you through declaring bankruptcy]. | ||
==Who can help== | ==Who can help== | ||