I recently had a meeting with a senior that reached out to me to learn of what options are available to help him reduce or consolidate his debt. He rents an apartment in Ottawa and also owns a car that has been paid-off for a couple of years. His income consists entirely of Government Assistance. His credit rating is currently good and so it allowed him access to approximately $14,000 of unsecured debt (credit cards and Line of Credit).
Unfortunately he had to use his credit to help cover some of his living expenses due to the rapidly rising cost of living. This is a very common situation as incomes increases are not keeping pace with the cost of things such as electricity, groceries, etc. Despite cutting back on expenses as much as possible the credit cards have now reached the maximum limit. This usage was done out of necessity and with the hopes of eventually paying them off when his financial situation improves.
Currently he has reached a point where the minimum payment cannot be made and credit is no longer accessible. I would consider this the Tipping Point. Once you realize and admit to yourself that this point has been reached you have a number of options.
You can stop paying the creditors and endure the relentless harassment of phone calls and letters from collection agencies. This could last many years and will make you virtually unable to get anytime in the future. This is a very stressful strategy.
Another option is that you can juggle small payments around from month to month and pay such small amounts that the interest charges are not even covered. This strategy will never eliminate your debt and eventually it will to a great of stress and then probably creditor avoidance as mentioned above.
In my opinion, the best strategy is to tackle the debt issue immediately and head on. This is more logical and will lead to a faster resolution and a great deal less stressful. If you consult a Debt Specialist like me can educate and guide you through the process so that your best interests are front and center.
For example, I was able to reduce his debt by more than 70% with a repayment plan that is interest free and be debt free in 5 years or less. This also increased his monthly cash flow by over $300. I was also able to get him approved for a credit card so that he had it for convenience and emergencies.
Seniors, please address your debt issues today and don’t feel ashamed as many others are in a similar situation but choose to ignore it.
If you live in the Ottawa region and you want to more about how to restructure your debts please visit Shawn Frank or read more on his 4 Pillars Ottawa page .
