Why is there so much credit card debt
We live in what is called a “Consumer Society” this means that products are bought on credit, so you have it now and pay for it later with interest this is called unsecured debt. It is easy to stay on top of your debt if you pay it off monthly. Everyone has good intentions of doing this but then along comes unexpected expenses and before you know it your debt is too big to pay off. Many people comment that based on the payments they are making it should just about be paid off but when you look at the balance all those payments have not made a dent in it.
The debt trap
Just paying the minimum payment is not enough, it’s the “never never” plan! Once you are on this treadmill it is very difficult to get off, the creditors keep raising your credit limits and life keeps happening and the next thing you know most of your income is paying the minimum payments and the balances never go down. This is exactly where the banks want you to be! Do you want to spend the rest of your life like this or do you want to do something about it.
What is debt restructuring
This is where a solid debt restructuring plan comes in, there are several tools available relative to the needs of the individual and what kind of debt they might have. Often consumers can file a consumer proposal to the creditors – through a licensed Trustee in Bankruptcy, by paying back less than what is owed but more than what they would be paid in a bankruptcy. This reduces the debt very significantly, reduces the monthly payments and no interest is paid on the remaining debt. This is considered taking the “high road” in dealing with your debt. This option provides the opportunity for you to be debt free in five years or less, be protected from any harassment from creditors and is binding on them.
Sounds too good to be true
So what’s the catch you say? Well, for starters consumers need to know that Trustees in bankruptcy work for your creditors so it means they are looking out for the benefit of all the people you owe money too. This is where 4 Pillars can play a key role to ensure your long term financial goals are in sync with the debt restructuring plan and your interests are represented in the plan.
What are the other debt settlement plans
Occasionally bankruptcy is the best option, if the debt is too large and the income is limited it may be in your best interest to do a bankruptcy. 4 Pillars has the most comprehensive credit rebuilding plans so we can guide you through the process if required. In a bankruptcy the Trustee in bankruptcy has an ongoing interest in your income as it may affect the “value of bankruptcy” and how much you are required to pay your creditors. In the bankruptcy process the trustee takes control of your assets, and if your creditors have an interest in those assets (think equity) then you must either buy back those assets or allow the Trustee to sell them on your behalf. Bankruptcy is normally the cheapest way to deal with your debt but not always the best way its important that consumers are fully educated on the risks before proceeding.
Negotiating directly with your creditors to settle debt
There are times when doing a formal restructuring (consumer proposal or bankruptcy) may not work because your home equity or income might be too high to qualify for certain debt restructuring plans. That is when we look at doing informal processes. This may include getting a consolidation loan to settle your debts to get you out of debt.
Whatever the option is that works best for you and your particular situation restructuring is about you and making your life better! Make sure you are fully educated on all your options before proceeding.
About the Author:
Robert Osborne is located in the East and West Kootenays of BC. Robert helps consumers deal with money problems and other complex financial problems by finding creative solutions for them to get out of debt fast. To learn more visit his website or call him directly at 250 – 365 – 8070
