Debt is a common financial concept that many individuals encounter at some point in their lives. It can be overwhelming and confusing, but with the right knowledge and tools, managing debt can become more manageable and less daunting. In this blog post, we will delve into the different types of debt, the importance of wise debt management, the impact of interest rates, and how our interactive debt calculator can help you take control of your financial situation.
Canadians in Debt
Here are some key stats about Canadians in debt in 2023
- 82% of Canadians attribute their deteriorating financial situation to spending on essentials.
- 63% of Canadians expect to make cutbacks in their expenses, with food being the primary area for cutbacks.
- Over 40% of Canadians have seen a rise in their debt levels over the last year.
- 33% of Canadians express anxiety regarding their present financial circumstances.
Everyone across the nation is feeling the pinch in their wallet. But what many Canadians don’t know is that there is help available. We’ll talk more about that below.
I’m In Debt, What Are My Options, 4 Pillars Interactive Debt Calculator
4 Pillars consultants offer a variety of services specific to people in debt. We outline the options available to you and walk you through the process so you find the best solution available. Your debt solution will likely be one of the following:
- Consumer proposal
- Bankruptcy
- Consolidation Loan
Each situation is different, and determining which route is best for you can be difficult. That’s why we’ve created an online interactive debt calculator for you to take and a checklist with steps to follow to determine your next steps. Download the guide below!
I Can’t Pay my Debt, How Long Before Collections Come?
As your financial situation deteriorates, it may be only a matter of time before you begin to fall behind on your credit card statements.
If you can’t pay for your home, read this resource on home foreclosures, click here to access that resource
Usually, unsecured debts always follow the same pattern:
Stage 1
When you are 30 days past due, they will reach out and attempt to help you get caught up. During this time, you may lose access to your credit, and their collection department may be in contact with you. Your missed payments will start to report negatively onto your credit bureau.
Stage 2
After about 90 days, they may ‘write off the debt’ and/or send it to a collection agency. At this stage, 3rd party collection agencies will register the debt as a “debt in collection” and, in almost all cases, increase the intensity and frequency of their collection of the debt.
Depending on what you disclose, the amount of debt and your particular situation your debts may stay in this stage for months or up to years, being handed off from collection agency to collection agency
Stage 3
At this stage, your debt collection will go in 1 of 2 basic directions
- Written Off – for smaller debts, the creditor ‘gives up’ and writes off the debt, and although you still owe the debt, it may no longer be in collections
- You get sued – the debt is handed over to a lawyer, and the lawyer pursues the collection of funds through the provincial court system. The lawyers draw up documents, file them with the court and work to obtain a judgment against the debtor.
Disclaimer: 4 Pillars are not lawyers. If you have any questions about the legal system, please contact your lawyer for legal advice. None of the explanations should be construed as legal advice, as this is just general advice about the legal system. For more information, please contact https://www.legalline.ca/
Upon judgment, the court will order a Judgment Debtor Examination. The goal of the examination is to examine the financial affairs of the debtor under oath to reach a settlement arrangement. You can read more about it here: https://www.legalline.ca/legal-answers/judgment-debtor-examinations/
Other options under the court order enforcement would be garnishing wages and/or applying to the courts to liquidate debtor assets in pursuance of the debt.
At any time through this process, a debtor can file for protection from their creditors to resolve their debt problems.
Case Studies: Real-Life Debt Scenarios From 4 Pillars Clients
To provide real-world examples of effective debt management, we will showcase case studies of individuals who successfully paid off their debt using different strategies and tools. We hope these stories will inspire and motivate you to take charge of your financial future.
Case Study 1: Loss of Job
Angela came to 4 Pillars after trying to get a handle of her debts on her own. She was laid off from her job when her position was eliminated, leaving her to find any type of work she could. After months of no success, she had no choice but to go on Employment Insurance.
Her bills came, and debts started to add up. When 4 Pillars met her, she was working at a minimum wage job, at her wit’s end, and extremely overwhelmed and stressed out about how she was going to manage to repay $55,000 of credit card debt, especially when the interest kept growing.
We put a plan together that Angela was very comfortable with and we were able to reduce her debt to $12,000! Angela now had a plan to be debt-free, stop the interest and have an affordable payment.
The stress was instantly reduced and now we are able to work together on rebuilding her credit.
Case Study 2: Divorce
Caitlin came to 4 Pillars after going through a separation, having vet bills to care for her sick dog and doing everything she could think of to get a handle on her $48,000 credit card debt.
She was paying over $1400 a month just to satisfy the minimum payment.
Caitlin was getting nowhere on her own. After a quick Google search, she found our debt options checklist (provided in the download above) She still felt a little overwhelmed and didn’t know which course to take. So, she then decided to take the 4 Pillars Advantage Assessment (also found in the download above) and determined that the consumer proposal made the most sense for her. After reviewing her case, we also agreed that a consumer proposal made the most sense for her. It was also the cheapest option.
Conclusion
Debt doesn’t have to be a source of stress and anxiety. By understanding the different types of debt, managing debt wisely, utilizing tools like our interactive debt calculator, and staying committed to a debt repayment plan, individuals can take control of their financial well-being and work towards a debt-free future. Empower yourself with knowledge and tools to achieve financial freedom.
