How can you tell when you have too much debt? The answer is different for everyone, but there are some sure signs that you should start looking for debt solutions.
- You’re making minimum payments on credit cards.
- You have to prioritize paying one bill over another.
- Your debt-to-income ratio is 40% or higher (even 15-39% is a sign that you should look into credit counseling and other ways to reduce your debt outside of insolvency).
- You feel stressed out every time you get a new bill.
Your financial and emotional health are at stake when you’re in debt. The good news is, you can get help. A bankruptcy trustee, now known as a Licensed Insolvency Trustee, can help you file a consumer proposal to get out of debt without filing for bankruptcy. These are the 5 ways a consumer proposal will help you get out of debt.
#1: Debt Relief
The first benefit of a consumer proposal is that it provides real debt relief. Bankruptcy trustees like David Sklar & Associates will look at your expenses, your income, and your total unsecured debts. Based on that information, they will propose to your creditors a monthly payment you will make to repay your creditors over a period of up to five years. This can amount to significant debt savings.
#2: No Interest Payments
The reason it can be so hard to get out of debt is that compound interest escalates rapidly. Compound eats up your payments and ultimately leaves you paying interest on interest. As much as half of your minimum payment on a credit card can wind up going to interest before it pays principle.
A consumer proposal stops interest from growing on your debt, which makes it one of the more compelling debt solutions that work for you and help you get out of debt.
#3: Stop Collections
As soon as you file for a consumer proposal, your creditors and debt collection agencies must stop contacting you and cease legal actions to collect their debts. That includes garnishes on your wages, collection calls, and legal actions on your bank accounts.
#4: Keep Your Assets
The biggest difference between a consumer proposal and a bankruptcy is what happens with your assets. Consumer proposals don’t touch your assets. You repay your creditors through fixed monthly payments. It’s a better alternative to bankruptcy when you have a steady income and significant, non-exempt assets.
#5: Rebuild Your Credit
The consumer proposal process includes taking credit counselling courses offered by bankruptcy trustees like David Sklar & Associates. These courses teach you how to rebuild and use credit after insolvency. By learning how to rebuild your credit after insolvency, you put yourself in a position to use credit to build your financial health, qualify for a mortgage, and improve your credit rating.
Find a debt solution that will help you get out of debt the smart way. Consumer proposals offer significant debt relief and will give you some breathing room in your life.