Debt Solutions

Many thousands of people in Canada and around the world are experiencing financial problems and this unfortunate fact is no different here at home. Many individuals and business are experiencing debt problems here in the Maritimes.

If you or a loved one is having a hard time making ends meet, then you are not alone. Please read the information on this site to learn the options to help remedy your financial problems.

We do caution you the information contained in this website is intended as a general summary of options, when dealing with financial problems, and is not intended to replace professional advice.

As every situation is unique and a website cannot explore every potential solution or describe every situation.

We encourage you to contact Allan Marshall & Associates Inc for a free consultation to discuss your options. Call toll free tel:+1 (888) 371-8900 to schedule an appointment with a professional in your area.

Debt Solutions

The following solutions to financial problems are intended to provide individuals with a variety of alternatives to help identify possible paths to remedy their financial problems. The relevance of each option will depend on the severity of that unique situation.

In many cases individuals wait too long to discuss their options with a professional. Don’t let this be you!

The approach we apply when reviewing an individual’s circumstances is to match the right solution for the situation. In doing so we review all options, from the simple common sense through to the complicated legal solutions.

Steps to correcting a financial problem:

First step: Admit the financial problem exists.

  • The first step to fixing a financial problem is admitting you have a problem. This is often the most difficult part.
  • Many individuals continue to procrastinate hoping their money problems will correct themselves. Others hope tomorrow or the next day their situation will improve to a point they can get out of the debt on their own.
  • The fact is until you understand you are having a financial problem, you will be looking to correct the financial problem.
  • Waiting to address the problem will only make the situation worse. You can’t ignore money problems. So make sure you understand your situation and your rights and remedies before the problem gets worse.

Second step: Evaluate your financial problems.

    • Anytime you have a problem, it is important to stop and evaluate your situation.
    • When you evaluate your financial situation you need to answer two questions:
    1. How severe is my financial problem?
    2. What caused my financial problem?

How Severe is my financial problem?

    • The question of how severe is my financial problem is very important. As the less severe the financial problem, the greater the range of possible solutions.
    • To evaluate your financial situation, you should start by:
    1. Making a list of all your monthly expenses. This is your monthly cost of living. (Rent, hydro, telephone, groceries, insurance, gas, etc.).
    2. You list should not include items such as monthly unsecured creditors and bill payments. (Visa, master card, lines of credit, overdraft, etc.)
    3. Once you have the list of monthly expenses completed, calculate the total monthly expenses and subtract that total from your net monthly income.
    4. Compare the balance of funds remaining to the amount you are required to pay monthly on your unsecured creditors.
    5. The difference between the money you have available to pay your creditors and the amount you are required to pay monthly will give you a strong indication of the severity of your financial problems.
    6. If the amount is close to the amount required to be paid. You may simply have to adjust your budget. If the amount is more substantial other options may be required to correct your financial situation.
    7. Keep in mind there is always a solution. We Can Help!

What caused my financial problem?

  • After determining the severity of your financial problem it is important to identify the root causes.  Identifying the cause of the problem is just as important as finding a solution.
  • Without identifying the cause of the problem and taking steps to correct the issue, habit or behaviour that caused the problem a solution will never be successful.
  • This is important to note, because finding the cause of a financial problem is at least as important as finding a solution, because if the root cause of the problem is not treated then the problem will simply continue to repeat itself.
  • If the debt problems occurred because an individual did not prepare a budget and continually over spent, then getting a consolidation loan to pay off credit cards will not correct the problem long term because that individual will most likely continue to over spend.

Solutions to debt problems

The following list are some of the various options that are considered when reviewing an individual’s solutions to financial problems. The list may not be complete but it is a good start.

Budgeting skills

  • Creating a budget is an important part of creating a healthy financial lifestyle. Budgeting is about learning where you spend your money and taking steps to controlling where your money is being spent.
  • Budgeting helps you set priorities to accomplish realistic goals through financial planning. It is not about pinching pennies or going without.
  • Budgeting can be the single most important financial thing you do as it controls all the financial aspects of your life.
  • If you need help creating a budget please contact our office and request one of our free counselling books that deal with budgeting.

Reduce your expenses

  • You should review your monthly expenses to see if there are any expenses that can be reduced or eliminated. These could be expenses you reduce temporarily or permanently.
  • Reducing recurring expenditures is a great way to reduce monthly costs and increase the funds available to pay down debts or simply increase the amount of money you have to spend on other things.
  • Everyone’s situation and priorities are different but here are some suggestions which would allow you to reduce your monthly expenses and not cramp your life style.
    1. Daily Coffees – from chain stores 2 a day @ $1.20 / coffee ($72.00/month)
    2. Message manager on your phone ($5.00/month)
    3. Call display on phone ($5.00)
    4. Eating out for lunch – average $7.00 / day ($140.00)
  • Simply using the above four examples you can save $222.00 / month to be used to get control of your debt. Please understand we do not suggest you cut every extra from your budget, we simply suggest you cut the unnecessary spending, at least for a short period of time to help you bring your finances under control

Increase your income

  • This option is not for everyone and may not be possible due to family commitments, conflicts with current employment or even your ability to find a second source of income.
  • Increasing your income however, is not limited to a second job (full or part time) it could also be:
    1. Requesting extra hours at work. (Overtime)
    2. Getting a roommate or boarder.
    3. Making sure the household operating costs are divided evenly between the members of the household.

Contact your creditors

  • If your situation has changed and you are unable to make your payments for a short period of time, call your creditors to explain the situation and suggest an alternate arrangement that might be mutually acceptable.
  • Many creditors are willing to co-operate and are willing to defer a payment to the end of the loan or other options.
  • Read your financial contract as the contract spells out what can happen if you miss a payment or fall behind but many also explain your options if you can’t make a payment.
  • Remember you won’t know if your creditor are willing to work with you unless you contact them.

Convert Non-Essential Assets to Cash

  • Converting Non-essential assets to cash is the sale of assets for the purpose of using the sale proceeds for payments to creditors.
  • You may have some stocks or bonds or even an extra vehicle you are willing to sell to enable you to make your payments.
  • If you are considering selling assets for the purpose of paying your creditors we suggest you discuss this option with a professional like Allan Marshall & Associates Inc.
  • There are a number of assets that are protected by law as exempt assets that you would have been able to keep even if you were to declare bankruptcy.
  • Selling assets is a good idea if it will resolve your financial problem. If however selling your assets is simply delaying the inevitable then you are better off to talk to a professional before you start selling assets. There may be other ways to resolve your financial problems without losing all your assets.

Refinancing

  • Refinancing your assets may be a possibility if you have equity in an asset. An example could be getting a second mortgage on a house.
  • Taking equity out of an asset such as a second mortgage could help pay off your existing unsecured creditors like Visa, Master Card, etc.
  • When considering this option you need to pay close attention to your budget to ensure you can afford to make the mortgage payments.
  • If you have not identified the original source of your financial problem, this option may leave you in a more difficult situation.
  • We suggest you talk to a professional to discuss your options.

Consolidation Loan

  • Many financial institutions are willing to provide consolidation loans to pay off all your outstanding debts and, in return, you make one monthly payment on that loan.
  • The lending institution’s willingness to provide a consolidation loan will depend on your credit and income.
  • You should compare rates at the different banks and lending institutions as rates vary.
  • If you have not identified the original source of your financial problem and continue to spend on credit, you may find yourself in a more difficult situation.

Informal Proposal

  • This is a process where a debtor negotiates with their creditors to arrange payment terms.
  • Creditors will usually require you to explain your situation to convince them they should consider your offer to settle the debt.
  • Informal proposals are arrangements which might include making lower payments over a period of time until the amount has been paid in full, but could even be an agreement to pay less then the full amount through in lump sum payment.
  • If you are successful at negotiating an informal proposal you would be advised to get the new terms in writing before making any payments.
  • Informal proposals are usually most effective when you only have a small number of creditors with whom to negotiate.
  • Informal proposals do have a number of difficulties:
    1. Getting all your creditors to agree.
    2. No binding mechanism to force creditors to agree.
    3. Creditors who have refused may continue to harass and take other collection actions.

Credit Counselling

  • Credit Counselling is a voluntary program between you and your creditors similar to an informal proposal.
  • Credit counselling companies, even not for profit, are often paid a fee from the companies you owe for collecting the money from you. They may also request you to pay a fee for negotiating repayment terms with your creditors.
  • Credit Counselling does have a number of difficulties:
    1. Getting all your creditors to agree.
    2. No binding mechanism to force creditors to agree.
    3. Creditors who refuse or change their mind may continue to harass and take other collection actions.
    4. Creditors may continue to charge interest unless they agree to waive same.
    5. Affects your credit rating for a period of 2 years from the end of your credit counselling program, if credit counselling company makes the credit reporting agency aware. ( For example: if your repayment program is for five years your credit would rate as an R7 for a period of 7 years.)
  • With the consent of creditors a Credit Counselling repayment program will sometimes help overburdened debtors.
  • Care should be taken by debtors that they allow themselves sufficient income for a reasonable cost of living before committing to a payment schedule.
  • Before committing to a Credit Counselling program you should talk to a professional like Allan Marshall & Associates Inc to discuss all your options. A consumer proposal will often take the same amount of time to complete but a consumer proposal stops all interest and penalties, even with government debts.
  • It is interesting to note that although a consumer proposal is a legal process that forces your creditors to stop collecting it is often less expensive then Credit counselling programs (Even the not for profit).

Consumer Proposals

  • A Consumer Proposal is a legal procedure that allows an individual to modify their payments to creditors by extending the time for payments or reducing the total amount to be paid, while at the same time stopping all interest and collection activity.
  • It is intended to provide a debtor with the ability to start over financially by eliminating most, if not all unsecured debts.
  • A proposal is similar to an agreement through credit counselling only it is a legal process that instantly stops creditors and sets a predetermined period of time for the creditors to vote on the acceptance of the proposal.
  • If the majority of creditors accept the proposal, the court will force it upon the remaining creditors. (With Credit Counselling all creditors have to agree for it to be successful.)
  • If a proposal is made and is accepted by creditors and approved by the Court, then the proposal is legally binding on all creditors whether they voted to accept the proposal or not.
  • If the creditors do not accept a consumer proposal recommended by Allan Marshall & Associates Inc., then we do not charge you a fee.
  • Click this link for more detailed information on Proposals!
  • For a free consultation about proposals at no cost or obligation contact us at Allan Marshall & Associates.

Bankruptcy

  • Bankruptcy is a legal process available to honest individuals who are experiencing a financial crisis.
  • The immediate benefits of bankruptcy are the stay of proceedings which stops all legal actions, collection proceedings, harassment and even garnishments.
  • A discharge from bankruptcy is the process by which an individual has completed the bankruptcy process and is legally absolved from the responsibility of the payment of their debts.
  • Bankruptcy offers a person who would otherwise be unable to get themselves out of debt, the opportunity for a fresh start.
  • Click this link for more detailed information on Bankruptcy!
  • Bankruptcy is not the right choice for everyone or every situation, however much of what is said about bankruptcy is not true. Please refer to our section on myths and facts about bankruptcy to get the truth.

Conclusion

  • The preceding list is a quick reference of some of the options available to resolve financial problems.
  • There are many situations that may require additional options or a combination of options to obtain the best results.
  • We strongly recommend anyone having financial difficulties to contact Allan Marshall & Associates Inc. to schedule a free consultation. No amount of reading can take the place of professional advice.
  • The sooner an individual identifies a financial problem and takes steps to correct the problem, the better the outcome. One of the fastest ways to understand your options is to talk to a professional.
  • Again, we offer a free Initial consultation, in person or by telephone, to discuss options, answer questions, and offer solutions at no cost or obligation. We Can Help!®

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