Debt Help: All Your Options Explained Credit Canada Debt Assistance
Whether you’re drowning in debt or just sort of keeping afloat, you should know that you’re not alone. Today, the average Canadian household debt remains near record high levels, and surveys show that nearly half of Canadian employees are living paycheque to paycheque. Studies also reveal that a big portion of the average Canadian’s household income is going towards debt repayment, while a good portion of that is going towards interest charges alone.
And that’s not all. Two-in-ten Canadians say they will need to liquidate assets to pay off debt, and almost two-thirds anticipate taking on new forms of debt. You can see more alarming stats in our Household Debt Survey, or read on to learn more about managing your debt, including Credit Canada’s debt help services.
There are a number of warning signs that might be telling you that you’re in debt and need assistance. However, sometimes we choose to ignore the writing on the wall. For your own financial, physical, and mental well-being, here are some warning signs you should pay close attention to.
Difficulty paying bills
This is often where it all begins. Maintaining even minimum payments on monthly bills becomes difficult, and you start to miss payments, resulting in expensive overdraft fees. You might find that you’re robbing Peter to pay Paul, surviving by transferring balances to manage credit card debt, or taking out cash advances.
Stress, anxiety, and loss of sleep
Debt can keep us up at night, making it difficult to focus during the day. Worse, it can lead to high blood pressure and strokes. In fact, the Heart and Stroke Foundation of Canada even recommends financial debt counselling if you’re feeling the pinch.
Arguing with your spouse or partner
Debt problems and money issues are considered the number one reason why people argue, and can lead to broken relationships and even divorce, so it’s important to set financial goals with your spouse or partner to stay on (or get back on) track.
Receiving collection calls
Next comes the non-stop calls. If you’ve put your phone on vibrate to silence the rings of bill collectors and debt collectors, you probably know you’re in over your head and need debt help and advice. In the meantime, here’s how you can stop collection calls.
If you’re experiencing any of the four “debt symptoms” above, try our simple debt assessment quiz to get an idea of where you truly stand and what your debt relief options are.
If you’re going to try to repay your debts on your own, congratulations! However, it can be a bit daunting at first. So, it’s important to use some smart expense management and repayment strategies to make it easier for you.
Tracking your spending is a great first step. While it might not sound like financial freedom, it’s one of the best ways to see exactly how much money is coming in versus how much is going out the door.
Tracking your spending is a great first step. While it might not sound like financial freedom, it’s one of the best ways to see exactly how much money is coming in versus how much is going out the door. This allows you to make important cuts in order to pay down debt or save up money. Tracking expenses also contributes to a more useful budget. Download our free expense tracker here to get started.
Once you’ve tracked your expenses and developed your budget, you’ll be able to see how much money you can dedicate each month to paying down your debts. Then, it’s time to decide which is the best method of debt repayment for you. Our Debt Calculator can show you how long it will take to pay off your debt using different payment strategies. Two popular strategies for debt repayment—and the debate rages on about which one is best—are the snowball and avalanche methods.
This involves paying as much as you can towards your smallest debt, regardless of the interest rate, while maintaining minimums on all the rest of your debts. This method allows you to pay off small credit card balances and other small debts as quickly as possible for quick wins.
This method involves paying as much as you can towards the debt with the highest interest rate first, while maintaining minimum payments on all the rest of your debts. This debt repayment strategy can potentially save you thousands of dollars in interest charges.
If you’re struggling and need debt assistance, be sure to sign up for our Credit Canada blog for useful tips, strategies, cutting-edge information, and consumer debt help tools delivered straight to your inbox.
The French poet Antoine de Saint-Exupéry once wrote, “A goal without a plan is just a wish.” That’s because setting goals and making plans go hand-in-hand. It’s what we call debt management. So when you're serious about eliminating debt, you’ll need both—goals and a plan. And the best approach to setting goals is to make them “SMART.” SMART goals are:
Identify who needs to be involved in the goal (you, you and your spouse, or the whole family); what you want to accomplish (save up money or pay down debt), where the money will go, when you want to accomplish the goal, and why you want to achieve the goal.
Place specific metrics to your goal to keep yourself on track.
Make your goals challenging but reachable, otherwise you’re setting yourself up for failure.
Decide which goals are most important to you at this specific point in time, and then zero in on them.
Set your target date for when you’ll achieve your goal, and make it reasonable.
Once you’ve determined your SMART goals, you need to make some foolproof plans for how you’ll achieve them. This is when it’s time to sit down and think, “What will help me with my debt?” For example, will you begin tracking your expenses better? Will you make lifestyle changes, like packing lunches, quitting smoking, or buying generic food brands? Will you pick up a part-time job or a side hustle, such as selling crafts online, dog walking, mystery shopping, or driving an Uber? Will you seek online debt relief or loans to consolidate debt? Or will you finally create that budget you’ve been meaning to put together? (If that’s part of your plan, our Budget Planner and other free tools are real debt helpers!)
There are three types of debt: the good, the bad, and the ugly. While good debt might sound like an oxymoron, when it comes to your credit rating, it’s absolutely true. Good debt includes mortgages (because your home is expected to increase in value over time while the interest rate is relatively low for mortgages) and student loans (because your education is expected to earn you a better salary over time).
On the other hand, bad debt includes credit cards (because most items you charge to your credit card have little to no value and credit card interest rates are typically high)...
On the other hand, bad debt includes credit cards (because most items you charge to your credit card have little to no value and credit card interest rates are typically high) and auto loans (because cars and trucks depreciate in value as soon as you drive them off the lot). Even worse are payday loans, which have extremely high interest rates and high penalties for non-payment. If you need bad credit debt help—or assistance with those ugly payday loans—we’re here for you.
“Help me get out of debt!” Our certified Credit Counsellors have heard that many times before, and they’re pros at doing just that, so don’t be afraid to pick up the phone and call 1.800.267.2272. Credit counselling is a three-step process where our experts assess your situation, offer debt solutions, and provide money management and budgeting advice. Debt counselling is 100% free and completely confidential, so you have nothing to lose but your debt—and a whole lot to gain.
Debt counselling is 100% free and completely confidential, so you have nothing to lose but your debt—and a whole lot to gain.
Our certified Credit Counsellors also offer financial coaching. This consists of six debt assistance sessions that cover everything from changing your money mindset to managing credit and debt. By the end of the sessions, you’ll have a clear vision for your financial future and ready to live a stress-free, debt-free life.
Best of all, it really works! See what people just like you are saying about the financial freedom they achieved with Credit Canada by checking out our testimonials page.
Credit scores can rise and fall just like the tides, and they range between 300-900—the closer to 900, the better. Here are five factors that can impact your credit score.
Bill payment history (On time? You're fine!)
Credit utilization (Ratio of debt to available credit)
Age of your credit history (The older the better)
Credit mix (Diversity demonstrates your ability to handle a variety of debt products)
Number of inquiries (How much credit you’ve applied for. FYI—checking your own credit score does not count as an inquiry, so go ahead and keep tabs on it!)
If you’re looking to improve or rebuild your credit, you need to get up-to-date on any missed payments and stay current. You should also pay off debt rather than move it around, make sure you have enough money in the bank to cover any automatic bill payments and cheques you write, and scan your statements and credit report for any inaccuracies. Applying for a secured credit card is another way to build credit. With these cards, you put a deposit down on the card that the credit card company holds onto in case you default on your monthly payment.
If you keep making regular payments on time, this will begin to show that you’re honouring your commitment.
If you keep making regular payments on time, this will begin to show that you’re honouring your commitment. Lastly, while paying off accounts in collections should eventually be done, they will stay on your credit report longer than debts that have not gone into collections yet, so focus on those first and you can get them back into good standing.
A word of warning: Some lenders offer credit rebuilding loans (you’ve probably seen ads for these supposed credit repair and debt help companies online). These loans usually charge extremely high interest rates, and in most cases, do very little or nothing to rebuild your credit. In fact, they can make things worse for you.
A Debt Consolidation Program (DCP) is essentially an arrangement between you, your creditors, and a third-party credit counselling agency that offers non-profit debt relief. When you enter into a DCP, your Counsellor will work with your creditors to:
Reduce or eliminate the interest on your debt
Negotiate a lower monthly payment you can maintain
Set a completion date to pay off all your debt
Stop collection calls
If the creditors agree to the terms, you will send one easy, lower monthly payment to the non-profit credit counselling agency, which then distributes that payment to all your creditors that are on the Program.
If the creditors agree to the terms, you will send one easy, lower monthly payment to the non-profit credit counselling agency, which then distributes that payment to all your creditors that are on the Program. This eliminates the hassle of paying multiple creditors for you.
While you are on a Debt Consolidation Program, you will need to say goodbye to your credit cards; however, many people have long-since maxed them out anyway, so it’s rarely an issue. A certified Credit Counsellor from a reputable, non-profit credit counselling agency can help you obtain a secured credit card that you can use while you are on the Program (which will rebuild your credit too) while also providing other debt relief services to set you up for success. This includes building a personal monthly budget for you, showing you how to track and control your spending, setting financial goals, and learning how to make your money work for you.
Looking for loans to help consolidate debt? There are numerous advantages to a debt consolidation loan, such as the convenience of having just one monthly payment. Unfortunately, there are also some drawbacks. For example, debt consolidation loans often require collateral, such as a home. Loan recipients must also have a good credit rating, which is something many people in debt don’t have. And of course, as with all loans, a debt consolidation loan will have a set interest rate, which could be high for some people, doing more harm than good.
Perhaps the biggest negative is that loans to consolidate debt can actually put you further into debt. That’s because unlike a Debt Consolidation Program, you’ll continue to have access to your credit cards. Many people make the mistake of continuing to use them, which means they wind up having to pay back the large loan and keep up with credit card bills on top of that.
You know the saying, “If it sounds too good to be true, it probably is.” This definitely applies to debt settlement services. These agencies have been the focus of a consumer alert from the Financial Consumer Agency of Canada (FCAC) for unscrupulous practices and high-pressure sales tactics.
They advertise paying only pennies on the dollar of your debt, but charge large up-front fees before any action is taken (if any is taken at all).
Often, they advertise paying only pennies on the dollar of your debt, but charge large up-front fees before any action is taken (if any is taken at all).
The Stronger Protection for Ontario Consumers Act has created standards of conduct for debt settlement agencies operating in Ontario. This includes banning up-front fees, placing limits on fees they can charge, requiring detailed contracts, and establishing a 10-day period where you can back out after giving it more thought. Use caution when dealing with debt settlement services and any company offering credit card assistance.
Need debt relief and considering a consumer proposal (CP)? It might be an option and is generally viewed more favourably than bankruptcy, but it’s still a form of insolvency.
While a bankruptcy eliminates all debts, in a consumer proposal you will reach an agreement with your creditors where you only pay a percentage of what is owed. You might also be given more time to pay it off. In a bankruptcy, assets can be seized, while CPs allow you to retain them.
...although you are paying back a portion of the debt you originally owed, a consumer proposal is still considered insolvency, similar to bankruptcy, so it will negatively impact your credit rating as well.
It’s also important to understand that although you are paying back a portion of the debt you originally owed, a consumer proposal is still considered insolvency, similar to bankruptcy, so it will negatively impact your credit rating as well.
While some may see bankruptcy as a blank slate and a chance to start fresh, others may view it as a mark of shame. The truth is it’s neither. Bankruptcy can follow you like a lost puppy, but it’s not nearly as cute. It kills your credit (and makes it difficult to rebuild), seizes any equity you have in your home, as well as non-exempt assets such as RRSP contributions and tax refunds, and it forces you to perform court-ordered duties. On the other hand, if you’ve tried everything in your power to get out of debt and have exhausted all your other options, it might just be a solution to explore. It doesn’t mean you’re a bad person, it just means you might have made some bad credit choices or fell on some very hard times.
So how do you know if filing for bankruptcy is the right option? Speak with a certified Credit Counsellor and let them know about your situation and that you need assistance with getting out of debt. If you’re looking for companies that help you get out of debt, Credit Canada is here for you and all of our counselling is free.
It’s very easy to dig yourself into a financial hole, but it can be very difficult to get yourself out of one. If you’ve tried to reel in your finances but they keep spinning out of control, Credit Canada is here for you. Our certified Credit Counsellors offer free debt relief advice and can discuss all of your debt relief options with you.
We also understand that you have a lot of choices, and Googling “debt help Canada” can turn up dozens of companies—so who can you trust? Unlike some debt assistance companies, Credit Canada is a non-profit agency with over 50 years of debt support experience in Canada. Our certified Credit Counsellors have worked with over two million people to resolve more than $350 million in debt. We’d like to do the same for you. Contact us today at 1.800.267.2272 to get debt relief and a free debt assessment.