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How Does Debt Relief Work?

Are you struggling to make payments on your loan? You are not alone. According to statistics, over 73% of Canadians suffer from debt, causing much financial stress in their lives. Debt relief is likely the answer they are looking for, but for many, navigating options and next steps can be a confusing and, sometimes, daunting experience.

 

Debt relief offers one possibility for lightening that financial burden, but there are pros and cons to it. Not everyone can be eligible for certain types of debt relief programs.

If you are curious about the benefits of debt relief, this blog will offer an overview of some options you can consider. When you are ready to work with a trusted and licensed insolvency trustee firm, give us a call.  

 

What Is Debt Relief?

Debt relief refers to the measures or steps you take to reduce the amount of debt you have. This could involve several things, like working overtime to increase your income, learning how to budget, or resorting to an organization or a program that specializes in reducing debt. 

 

Debt relief companies work with individuals and corporations to lessen or eliminate the burden of loans. In some cases, a Licensed Insolvency Trustees (LIT) will help counsel individuals or companies on how to emerge from debt quickly and sustainably. 

 

In other cases, your LIT will help the debtor draft what is known as a consumer proposal, which is a formal agreement to repay a debt over a longer timeframe. 

 

Some individuals and corporations can benefit from filing for bankruptcy. Although the word bankruptcy may conjure images of financial ruin, a well-executed bankruptcy plan can leave businesses positioned for strong future growth.

 

I'm in Debt - Who Can Help?

At Campbell Saunders Ltd., our licensed insolvency trustees can guide you through a wide range of debt relief options. Here are a few common examples. 

One of the most common forms of debt is credit card debt. According to statistics, in late 2020 in Canada, the average debt-to-income ratio was nearly 177%, which essentially means that there was $1.77 in credit card debt for every dollar of household’s disposable income. Despite the sobering statistics, there are many ways to help with your credit card debt.

 

One of the viable options you can consider is contacting a licenced insolvency trustee specialist who can help you understand and explore your options and ultimately find the solution that’s right for you.

 

The benefit of credit card debt relief includes long-term savings because you will repay your debts at a reduced interest rate. The possible cons include a hit to your credit score and long repayment periods. Certain types of debt may not be eligible for this type of relief. 

 

Common Types of Debt Relief Solutions in Canada

There are a few types of debt relief in Canada. Here are two popular options. 

 

Debt Settlement

Debt settlement is one of the ways to help you end your financial woes. It begins with an evaluation of your debt and a review of your current finances. After that, a legally binding agreement (called Consumer Proposal) is made with the creditor(s) on what you can realistically pay back in a time period – typically up to five years. The creditor will then accept this amount in order to settle your debt. By filing a consumer proposal, you will be able to restructure your debts, make them more affordable, and get assistance in securing a loan that will help you eliminate your debt. 

 

Debt Consolidation

Debt consolidation is the process of combining multiple loans and debts into a new loan with a lower interest rate and one monthly payment. With this strategy, you essentially cut the total amount of creditors you owe and use a single loan to pay off all your debts at once. This would be an informal negotiation and agreement between you and your creditors.

 

If you are looking for help relieving your debt in Vancouver or Richmond, our knowledgeable team of Licensed Insolvency Trustees can guide you through the debt-relief process using the formal options available pursuant to the Bankruptcy and Insolvency Act. The first step is to set up a free consultation with a member of our team.

Our licensed insolvency trustees will listen to your personal and financial goals and document the particulars of your financial situation. Then, we will work collaboratively with you to determine the best course of action.

 

Schedule Your Debt Relief Consultation Today

Don't let debt take control of your life. If you struggle to make timely payments on your loans, reach out to a member of our caring and compassionate team and book your free consultation.

 

At Campbell Saunders Ltd., we love helping people enjoy a fresh financial start in life.

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