Overwhelming Debt? An LIT Can Help With ThatNov 21, 2018
Ready or not, the end of the year is fast approaching. And, since November is Financial Literacy Month, now is a good time to think about your debt plans, budgeting strategies and how to hit some money goals before the year is done.
My debt is overwhelming and I don’t know what to do
The average Canadian owes nearly $20,000 in non-mortgage debt, according to new data from BDO Canada’s inaugural Affordability Index. Some demographics such as university grads and homeowners owe closer to $25,000. High-earners owe almost $30,000, on average.
And not all Canadians are comfortable with their debt loads. A third of millennials and a third of Canadians with kids at home say they’re overwhelmed and don’t know what to do next.
What are Canadians doing to reduce debt?
When faced with a challenge, Canadians are very resilient. Here are a few steps they’ve taken to deal with their debt:
- Reducing non-essential spending – Use a budget worksheet or budgeting app to carefully go over your spending each month. To free up cash for debt repayment, trim areas where you might be overspending.
- Reworking their budget – Maybe you made a budget in January but fell off track? Over the course of a year, income, bills and priorities change. Use this tool to rework your budget now.
- Selling off possessions – This is a great thing to do in the fall. Not only will you declutter your house before winter, you can earn some extra money doing it. Check out Facebook Buy and Sell or Kijiji to sell your unused items.
- Finding a side gig – No one likes to think of adding more work hours to their schedule. However, the side gig economy is booming. Find something that works for you, and remember, it doesn’t have to be long term — just enough to get you over the hump.
- Cutting up credit cards – You can’t use what you don’t have. Cutting up your cards (or just putting them on ice) can give you freedom and allow you to live strictly on a cash budget while paying back your debt.
How can an LIT help me achieve my debt goals?
A Licensed Insolvency Trustee is the only qualified debt professional who can recommend a wide range of debt relief options while offering formal debt solutions. That means, when you make an appointment with an LIT, they will first:
- Listen to your specific financial concerns in a judgement-free, no-cost, no-obligation consultation.
- Go over all your debts, past and previous along with your income and expenses to see how you’re coping.
- Make debt relief recommendations based on your specific situation. This might mean referring you to another debt or financial professional if you could use help with budgeting, credit consolidation or money management.
- If a formal solution is required, an LIT will help you each step of the way during the process.
A formal debt relief solution, such as a consumer proposal or bankruptcy can only be carried out by an LIT. And, if you require one of these formal solutions, your LIT will deal with your creditors on your behalf. Interest rates are frozen on all your debts and harassing phone calls and letters from creditors cease when you file.
However, you may not need a to file a consumer proposal or bankruptcy to deal with your debt. These formal debt solutions provide people who have unmanageable or overwhelming debt a fresh financial start — and they’re only considered after all other solutions have been ruled out.
However, booking an appointment with an LIT will allow you to see which debt relief options will work for you and allow you to make those changes sooner rather than later.