10 Ways to Get out of debt!
From Deborah Fowles
1) Use your Assets
If you have assets with some significant equity, such as a home
or a car you may be able to use these to get control of your
debt. For example, you could get a loan on your home sufficient
to pay off your debts. You could be saving a considerable amount
of money on interest if you pay off high interest credit card
debt in return for lower cost debt. If you have a car, consider
selling it, paying off your debts and buying a cheaper car.
Be careful though! Your don't want a "cheaper" car that will
cost you a fortune in repair costs.
2) Get a Second Job
Use the money from this job to only pay off your debts. List
your debts noting the interest rates. Pay off the debts with
the highest rates first and work your way down the list.
3) Put your Credit Cards on Hold
One of the best steps you can take to get out of debt is to
immediately stop using credit cards. At the very least destroy
all your cards keeping just one card for emergencies.
4) Set up a Repayment Plan
Cut back on your expenses and/or use freed up cash to pay down
your debts Pay off the debts with the highest rates first and
work your way down the list. 5) Get a Consolidation
A consolidation loan can make lots of sense. Get a loan to pay
off all your many debts and have just one payment to make. The
new loan usually has a smaller payment and a lower interest
6) Use the Services of a Credit Counsellor
There are two types of credit counsellor; independent credit
counsellors and ones who advertise as "non-profit". “Non-profit”
credit counsellors perform the same services as independent
credit counsellors and have similar training and services. We
do not distinguish between the two as they provide similar services
and both charge a fee
7) Informal Proposal
In some cases you can make a proposal to your creditors to set
up a payment plan that will allow you to pay your creditors
in an orderly way and thus help preserve your credit rating.
This operates similar to a debt consolidation loan except you
do not borrow the money to pay off your creditors. You may be
able to pay less than 100 cents on the dollar. For example,
a relative may be willing to pay a lump sum to the creditor
of say 50% of the amount owed in order for the balance of the
debt to be written off.
8) Use your Province's Orderly Payment of Debts System
Residents of some provinces such as Alberta, Saskatchewan, PEI
and Nova Scotia can apply for a Consolidation Order. This provision
of the Bankruptcy and Insolvency Act allows you to pay off your
debts, usually over a three year period, and clears you from
credit harassment and wage garnishment.
9) Proposal under the Bankruptcy and Insolvency Act
Under the Bankruptcy and Insolvency Act, a trustee files a Proposal
or an arrangement between you and your creditors to have you
pay off only a portion of your debts, extend the time you have
to pay off the debt, or provide some combination of both. To
be acceptable, your creditors must be better off under a Proposal
than if you go bankrupt. Proposals have a number of advantages
for the debtor under a great deal of pressure from his creditors:
Stay of Proceedings; No actions can be taken by creditors such
as wage garnishments. If a wage garnishments is in place it
will be removed.
Proposals offer a "win-win" situation. A proposal is good for
the creditors because they get more than if the person goes
into bankruptcy. It is good for the debtor as he avoids bankruptcy
and has his credit bureau report "cleaned" three years after
the proposal is satisfied.
If these alternatives will not work for you, bankruptcy may
be the only way for you to get a fresh start. Bankruptcy offers
a quick solution to getting out of debt. First time bankrupts
are eligible to get out of bankruptcy (and have all debts written
off, with some exceptions) in 9 months. More and more people
in Canada are going bankrupt.