Our Budget Advisers Want To Help
FAQ
In time of financial crisis
I’m too deeply in debt. What options do I have?
Here are some tips to help you to overcome your debt problem.- Stop borrowing to make sure you don’t get even deeper in debt
- Put away your credit cards and don’t use them any more
- To help clarify your situation, draw up your personal balance sheet (the list of your assets and liabilities)
- Reduce or eliminate certain types of spending (cable, cinema, restaurants, etc.)
- Get in touch with your creditors and try to negotiate an agreement with them. If you do not manage to do so, and it is a debt owed to a utility – telephone, for example – contact the Association des consommateurs in your area (1 877 962-2227); someone will certainly be able to help you. The majority of these associations give courses on budgeting, as well as free budget consultations.
- Consider consolidating your debts by taking out a personal loan with a reputable financial institution to repay all your creditors. In this way, you will pay less interest and you will only have one payment to make. A word of advice: contact several institutions to find the best rate possible.
- You can also register with the voluntary deposit service by addressing yourself to the Office of the Clerk of the Court of Quebec (at the law court in your legal district). You will then have to make a monthly payment calculated on the basis of your earnings and your family responsibilities. In addition to paying only 5% interest on your debts, you will be protected from possible seizure of your salary on condition, of course, that you respect the agreement. On the other hand, you will have a black mark in your credit file for three years, until your debt is paid off completely.
- You can make a consumer proposal. You propose to your creditors that you will make smaller monthly payments spread over a longer period (generally from two to three years), or repay them only part of what you owe them. To be able to resort to this measure, you must use the services of a bankruptcy trustee and have less than $75 000 in debts, aside from your mortgage. A mention will be recorded in your credit file for a period of approximately three years after the last repayment.
- As a last resort, there is bankruptcy. You will have to hand all your seizable goods over to a bankruptcy trustee, who will take care of selling them and distributing the funds to your creditors. This step is not free, but will, however, discharge you from all your debts after a certain time – provided that there is no opposition – except for those provided for by law (fines, alimony, etc). For more information, address yourself to the Office of the Superintendent of Bankruptcy Canada. Once liberated from your bankruptcy – after nine months in the case of a first bankruptcy –you may be able to restore your credit. To do this, make inquiries at a financial institution. Above all, beware of debt consolidation companies: generally, their solutions are expensive and produce disappointing results. They often advertise their services in daily and local newspapers.
