Mounting debt can be a cause for stress and sleepless nights. Credit card debts, high-interest loans, and lines of credit build up over time, and if you over-rely on loans to get by, you can wind up in deep trouble. Just as it takes time to get into debt, it takes time to get out. But at a certain point, it can feel like an impossible task.
If you’re unable to increase your income or cut expenses or can’t make more than minimum payments, it’s time to find another solution. The good news is that even if you feel like the situation is hopeless, there’s always a way to find debt help. It’s time to talk to a licensed insolvency trustee.
Who Are Licensed Insolvency Trustees?
Licensed insolvency trustees are independent professionals. Although they’re regulated closely by the government, they do not work for the government or for credit companies. While they do evaluate your finances and help you by explaining your options, they don’t really work for you either, the way a lawyer might.
They’re tasked with finding a fair solution that will get you out of debt and allow your creditors to recover something. Licensed insolvency trustees most often work for a firm, such as Debt Help BC, a company that provides debt help on Vancouver Island including bankruptcy and consumer proposals.
Bankruptcy vs Consumer Proposals
Licensed insolvency trustees in BC are the only professionals who can help you file for bankruptcy or get a consumer proposal. These are two debt help solutions that can reduce your total debt, stop interest from growing, stop collection calls and actions, and put a fixed timeline on settling your debts.
The two tools accomplish the same result differently. In a bankruptcy, your debt is settled once:
- Non-exempt assets have been sold and the proceeds disbursed to your creditors (such assets include vacation properties, second vehicles, home equity beyond a certain limit, etc.);
- A portion of any surplus income over a government-mandated amount earned until your bankruptcy is discharged and disbursed to creditors.
A consumer proposal differs in several ways:
- You make fixed monthly payments for up to five years without interest;
- None of your assets are required to settle your debts.
Should You Pay Debt with Savings?
The answer depends on your personal finances. To a certain extent, if you can spare some savings to pay off high-interest credit card loans, that will be more affordable. The interest rates mean the earlier you can pay off the loan the more you save.
However, you could hurt your financial future if you drain your RRSP or liquidate assets to pay off unsecured debts. Debt help can settle your debts without draining your hard-earned savings. In a consumer proposal, your assets are unaffected, while even in a bankruptcy, RRSP contributions made more than 12 months before you filed are likewise protected.
There are also tax implications to withdrawing RRSP funds too early, and it’s inadvisable to touch them. Debt help is an effective and smart way to get out of insurmountable debt. Talk to a licensed insolvency trustee in BC about your finances today.
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