What are the danger signs that you might need to go bankrupt?
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Living with unmanageable debt
It’s rare to find someone that 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 that it can have on you and those closest to you is the same.
Physical and emotional burdens – The burden of debt is most keenly felt with your mental and physical health. Side effects include loss of sleep, 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.
Loss and Repossession – Creditors can apply to repossess your possessions of value in order to pay off your debts or 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.
Poor credit – The inability to pay off your debts greatly decreases your credit score. This will severely limit the credit products that you can apply for in the future and it often results in you only being offered higher interest-rate products.
Warning signs that you have too much debt
There 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:
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!
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.
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.
Take control of your debt today
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. Learn more about debt consolidation here.
Frequently asked questions
Get in touch with Harris and Partners
If you need help from those who specialize in solving debt problems, contact us at Harris & Partners Inc. Licensed Insolvency Trustee. In Canada, our federally Licensed Insolvency Trustees can help you achieve long-lasting financial solutions.