Too many debts? Some Basic Options.
It is always best to meet with a Trustee who will discuss your specific circumstances and answer any questions you may have.
Consolidation Loan
If your credit history will still allow you access to credit, a consolidation loan can help you lower your payments by possibly getting a lower interest rate than you are currently paying, as well as spreading your payments over a longer period of time.
Negotiation
Negotiations can be done by you or someone else on your behalf (i.e. a lawyer). This is usually an approach used if you know your money situation will soon improve. For example, you are receiving employment insurance and will be called back to work in two (2) months. This method is simply asking the creditors to be patient and to lower or suspend your payments until your income improves. Creditors are often reasonable is you talk to them before you get too far behind in your payments.
Debt Management Program
A debt management plan (DMP) is a service provided by the Ontario Association of Credit Counselors. These are non-profit agencies created to help individuals experiencing financial distress.
The concept behind a DMP is this: you can afford to make a monthly payment; you just need some help negotiating with your creditors and a little breathing space to get back on top of things.
DMP's are best suited to person with a limited number of creditors (5 or fewer) and under $5,000 in debts. The advantages of a DMP are:
- Maximum period to repay is four (4) years
- Interest relief may be possible
- Some debt may be forgiven.
A DMP is not a legal procedure; it is a voluntary agreement between you and your creditors. As such, a DMP does not need to include all of your creditors, nor is it binding on your creditors. Neither does a DMP have the ability to automatically stop a garnishment order; the creditor must agree to lift the garnishment.
If you would like more information about a DMP click this link or look under Credit Counselors in the yellow pages for the agency in your area.