It’s rare to find someone who doesn’t have some form of debt these days, but it’s when that debt gets to the point where you are struggling to pay it that you need to take action.
Uncontrollable debt can have a lot of detrimental effects on your life, so you need to be vigilant for the warning signs that you may be heading for bankruptcy.
Why Is Debt So Dangerous?
Regardless of how you build up debt, the effect it can have on you and those closest to you is the same.
1. Physical and emotional burdens
The burden of debt is most keenly felt with your mental and physical health. Side effects include sleep loss, panic attacks, lack of concentration, loss of appetite, weight loss, and depression.
Ulcers and heart problems are also commonly linked to stress brought on by debt problems, and your relationships with friends and family can also suffer.
2. Loss and Repossession
Creditors can apply to repossess your possessions of value in order to pay off your debts. Alternatively, they can even apply for wage garnishments that directly take payments from your bank account. Not only is this traumatic, but it also damages your credit score.
3. Poor credit
The inability to pay off your debts greatly decreases your credit score. This will severely limit the credit products you can apply for in the future and often results in you being offered higher interest-rate products.
3 warning signs that you have too much debt
here are a number of warning signs that you can look out for to tell you if your debt is reaching unmanageable status.
Here are three warning signs you’re in too much debt:
1. You only ever pay the minimum amount
If you’re just paying the minimum payment every single month, then chances are high that your monthly interest charges will be higher than what you paid. To put that into perspective, if you pay $10,000 for a car on your credit card and it has an 18% interest rate, it’ll take you 28 years to pay off the car and interest!
2. You’re addicted to your credit card
Are you constantly calling credit card issuers to see how much credit you have available? Do you use your credit card as extra income? Have you resorted to buying the everyday basics with your credit card? If you answered yes to any of the above, you’re risking piling debt on top of debt and potentially heading for bankruptcy.
3. You don’t know how much you owe
If you are constantly avoiding opening bills, answering phone calls, or even looking at your bank statement, you’re in way too deep. While debt can be difficult to deal with, it’s imperative that you have a sense of what you owe and to whom.
If you can identify with just one of these signs, you might need to seek advice from one of our Licensed Insolvency Trustees in Canada.
What to do if you’re already in debt?
With internet shopping, it’s become easier than ever to overindulge because you never physically part with the cash to pay for your products. It’s only when the bill comes in at the end of the month that you realize how much of a hole you’ve dug yourself into.
Sometimes, unexpected events such as redundancy, illness, or having to quit work to look after someone as a carer can lead to debt piling up, too.
If you’ve already dug yourself into a deep hole of debt, we can offer a ladder out. The experts at Harris & Partners can help you file a consumer proposal or a bankruptcy review so you and your family can make a fresh start. We have branches all across Canada and the initial consultation is completely free, so you’ve literally got nothing to lose and everything to gain. To speak to someone in person about your debt issues, click here, or complete the online form to get a callback.
What is a debt management plan?
If a credit counsellor determines that your debts are so large that you can’t handle them on your own, they will work out a debt management plan with your creditors. You will then pay your credit counsellor one agreed regular payment, which they will distribute amongst your creditors.
What is a consolidation loan?
This is a loan that you use to pay off all of your outstanding debts by combining them into one single new loan with one monthly payment. The single payment is often lower than the combined amounts that you have been paying. The only potential snag with this method of debt restructuring is that you’ll need a credit rating good enough to qualify for the debt consolidation loan.
What is a debt settlement?
Debt settlement is essentially hiring a company to negotiate your debts with your creditors on your behalf with the aim of lowering the total debt amount owed. Debt settlement can sometimes be the best option to save you money, get you out of debt, and avoid filing for personal bankruptcy, which has serious long-term consequences.
A good example of a type of debt settlement is a consumer proposal. In a consumer proposal, debt can be reduced by as much as 90%, there are no upfront costs, and all fees are federally regulated. Only Licensed Insolvency Trustees are legally qualified to help you file a consumer proposal, so if you think this is the right option for you, contact us today.
How to know if you should file for bankruptcy
Here are 6 strategies to pay off your debt in the quickest way possible, but if the damage is already done then it might be time to consider filing for bankruptcy.
Speak with one of our Trustees here at Harris & Partners Inc. We have been working with people in your exact situation for over fifty years, and we can help you too.
When you speak with a Trustee at our firm, you will be advised about all your options and we’ll help you to choose the option that will solve your own unique circumstances. It doesn’t matter to us how you accumulated the debt and there’s nothing to be embarrassed about – we just want to help you to get back to financial stability again.
Your first consultation is no obligation and completely free, so take that first step towards freeing yourself of overwhelming debt – call Harris & Partners Inc. today.