Debt is something that many people and businesses deal with. It is completely normal to owe some money and make regular payments for it. But when debt starts to feel too large and it becomes a constant struggle to keep track of it all, then it could be time to get help. Debt relief comes in many shapes and forms, some might consider debt consolidation loans, debt management programs, a consumer proposal, or bankruptcy.
You might be in a position where you’re considering bankruptcy, but a Licensed Insolvency Trustee (formerly known as a bankruptcy trustee) can tell you when you should consider a consumer proposal instead. A good trustee will explain the debt relief process to you, empathize with your position, and give you hope that you can get back on your feet.
Know How to Spot Financial Danger Signs
In cases where your debt feels overwhelming and you are struggling to see how you are going to pay it all off, you’ll have a sense that something is wrong. But sometimes debt creeps up on us. Sometimes we become so accustomed to the persistent calls from creditors and accruing interest that we lose perspective and forget that we can be in control of our finances.
Know how to recognize the symptoms of a debt issue. You might be a good candidate for trustee-moderated debt relief like bankruptcy or a consumer credit proposal if:
- You can’t pay your credit in full and are making just the minimum payments on debts. As a result, you’re collecting too much interest.
- You can only make minimum payments on your bills.
- You have recently turned to payday loans to cover basic expenses. Similarly, you’re using credit for basic necessities.
- You don’t know the full total of your debts and you don’t confide in friends or family about your finances.
When Has Insolvency Hit?
A person or other entity is deemed insolvent once their finances dictate that the amount of money they owe exceeds their equity and assets. For instance, if someone who owed a substantial amount of money to unsecured creditors were to sell off all their assets and still could not pay their debts, then that’s a case of insolvency.
Bankruptcy or Consumer Proposal?
While it can be a highly stressful position to be in, knowing for certain that you are insolvent means that you also know what needs to be fixed. Even though you’re dealing with financial difficulties, you know what type of solution to look for. You need to look for a trustee in bankruptcy. You need their expertise to assess the details of your insolvency and let you know which method of debt relief is best for you: filing for bankruptcy or filing a consumer proposal in Ontario.
Consumer proposals give you the opportunity to negotiate with your creditors to repay a portion of the debt in instalments. It’s best for someone with a stable source of income and who has secured assets that could be lost in a bankruptcy. A full picture of your finances and a sense of your long-term financial goals will guide you towards the debt relief method that’s best for you. Even in overwhelming debt, you have options. A trustee will help you see them and plan out how to plan your recovery.