It’s normal to have some debt in your life. While the number of Canadians dealing with debt is on the rise, it’s not always a bad thing to owe money. When you owe money and you make regular payments to your creditors, you know that you’re building up a good credit score. But what do you do when your debt starts to get too big and you’re unsure of how to handle it?
When you’re in a difficult situation with your finances, it can be hard to know where to go for financial help when you need it. Luckily, professionals known as Licensed Insolvency Trustees (formerly known as bankruptcy trustees) can be consulted for expert advice on the methods of debt relief.
Do you think it’s time to take action against your debt? Here are some signs that your financial obligations are too great and it’s time to make changes:
- Your monthly credit payments make up 20% or more of your take home income (excluding mortgage or rent).
- You use your savings for daily expenses.
- You’re using cash advances on your credit cards or high-interest payday loans.
- You don’t actually know how much you owe in total to your creditors.
- You’re dishonest with your family or spouse about the severity of your debt.
- Your creditors are garnishing your wages.
A bankruptcy trustee can show you your options for debt management and recovery. It might be best for you to file for bankruptcy, file a consumer proposal, or file a Division 1 proposal. Even as you work towards debt recovery with the help of a bankruptcy trustee, it’s possible to make spending and lifestyle changes to improve your financial situation.
How to Approach Credit Card Debt
It can be a great feeling to finally commit to paying off your credit card debt. You can envision freedom from your creditors and even start planning for long-term financial goals.
If you’re worried about your credit card debt and want to get out, you should meet with a bankruptcy trustee. They can offer you credit counselling and educate you on the ways you can start to tackle your debt. Here are three things you can do today to work towards paying off credit card debt.
- Set a goal. You need to have specific, realistic, measurable, and attainable goals in order to be successful in your endeavours. When it comes to paying off your credit card debt, set goals for yourself with the help of a bankruptcy trustee. You can turn to family and friends to hold you accountable and support you along the way.
- Freeze your credit cards. Some people resort to an all-cash diet when trying to make dramatic improvements to their finances. To get out of debt, you need to stop accumulating any more debt whether you have a low interest credit card or a high interest card.
- Cut down costs. This seems simple but it can be harder than it sounds. Take the time to review your monthly expenses and look for opportunities to reduce your spending. Try a trial observation period (two weeks) where you spend as you normally would, then review your patterns afterwards and make changes.
Financial help is readily available to those who are ready to commit to improving their situation. No matter the reason for your issues with debt, it’s never too late to turn things around.