Debt Problems: Introduction
Debt problems are not always sudden. Even so, it’s a fact that financial difficulties can arise suddenly and unexpectedly, like the loss of a job or a vehicle breakdown. Debt problems can be of all sizes, from being a few hundred dollars short every month to being unable to make essential payments, like mortgages or rent. Debt problems will lead you to borrow elsewhere to keep afloat, leading to more financial woes and debt problems. Debt will also prohibit you from saving money and creating an emergency fund for a rainy day.
Here are a few warning signs of debt problems to show that you have gone too far in your debt cycle.
- Spending too much on your Consumer Debt
Consumer debt comprises credit cards, lines of credit, and auto loans. These always have higher interest rates than what you pay on your mortgages. If consumer debts take at least 20 percent of your income each month, it is a warning sign.
- Dodging phone calls about late payments
If you have skipped multiple payments on a credit card, or a loan, you will get calls from a debt collection agency, a company that recovers unpaid debts frequently. Take this as a warning sign of a debt problem.
- Making the minimum payment on credit cards
Paying just the lowest amount each month on your credit card means it will take a prolonged time to pay off your credit card balance. If you can only afford the minimum payment, you are in debt.
- Taking time to repay your high-interest debt
Consider asking yourself the time taken to repay your high-interest debt. If the figure is more than a couple of years, you might need financial advice or help.
- Borrowing money and cash advance loans
If you rely on cash advance loans or borrow money from an alternative source to make ends meet, you might be in financial trouble.
- Denied loans and credit cards
Whenever you cannot get your loans or credit cards approved due to bad credit or when the lenders’ terms do not meet your expectations, this may be a warning sign of debt.
- Failure to build up the savings
Every month, you should be putting some money into savings. You might have a debt problem if you don’t have enough money after paying your bills to save.
- Turning to payday loans
A payday loan is typically the last loan you will receive, and it is a clear sign that you require financial assistance.
A Licensed Insolvency Trustee is an excellent option for advice or solution to any above problems. Contact Dana Macrae – Licensed Insolvency Trustee. Call for a free and confidential consultation at 1-800-665-9965
- Debt Management Plan
Debt Management Plans (DMP) involve negotiating a lower interest rate with your creditors and converging all of your credit card payments into a complete, reasonable monthly payment. A DMP also comprises counseling services and financial education at no additional cost. It costs you a small fee, depending on your income level.
Do you need assistance with Debt Management Plans? Contact Dana Macrae – Licensed Insolvency Trustee.
- Consumer Proposal
Consumer Proposal is a legal process assisted by a Licensed Insolvency Trustee. Like DMP, a consumer proposal consolidates your debts into a single monthly payment. If your creditors accept a consumer proposal, it can drastically cut down the principal you must repay and extend the time for repayment.
Are you planning to file a Consumer Proposal? Contact Dana Macrae – Licensed Insolvency Trustee.
Bankruptcy is the third option for your debt management. The basic principle is that you give up some of your assets to repay most of your debts. You have to give up a part of your paycheque to pay off your creditors for a certain period.
Are you filing for bankruptcy? Contact Dana Macrae – Licensed Insolvency Trustee.