Can an LIT Help With All Types of Debt?Nov 21, 2018
With 5 interest rate hikes since 2017, there is no doubt your debt is costing you more. November is Financial Literacy Month (FLM), which is why we want to shine a light on debt and talk about the role an LIT can play in your debt relief.
Why deal with debt?
The cooler weather is here to stay which means, you guessed it, the holiday season is just around the corner. If you’re already strapped for cash, the holidays can be a big burden on your already-high debt load and squeezed budget. Instead of waiting for the start of another year, why not use #FLM2018 as a time to get re-acquainted with your debt goals and make a good push to the finish line?
Here are the benefits:
- Dealing with debt sooner than later means, you have more options. Waiting to deal with your financial problems, on the other hand will only add to your stress and keep more of your cash tied up in debt payments. Use this calculator to compare your debt repayment options now.
- Keeping an eye on your spending over the coming months will leave you with less debt regret in January. Follow a detailed budget to make sure you are not spending more then you can truly afford.
- Those high-interest balances aren’t going to go away on their own. If you’ve been plugging away making minimum payments, it’s time to change your strategy. Dealing with debt means more cash in your pocket and less financial stress.
What are my debt relief options?
Ready to make a dent in your debt? Here are some options:
- Budget – The first step in managing your money is to know where it’s going each month. Track your money with an app or use this budgeting calculator.
- DIY debt relief – Whether you combine your high-interest credit card balances onto a lower interest card or loan, put all your extra money toward your highest-interest balance, or cut up your cards and live on cash while you drastically slash those balances, it’s important to find a debt relief solution.
- Credit consolidation – Talk with your financial institution to see whether you qualify for a consolidation loan. This would combine your unsecured credit card debt and personal loans into one monthly payment. Just make sure to cancel those cards once they’re paid!
What types of debt relief options can a Licensed Insolvency Trustee offer?
An LIT is a qualified debt professional who can offer formal and informal debt solutions and advice. When you meet with an LIT, they may recommend any of the above debt relief options, based on your specific needs. However, they can also offer and perform insolvencies such as a consumer proposal or bankruptcy. They may also refer a client to a qualified credit counsellor for money management advice.
Which debts are covered and which debts are not?
Debt consolidation – If you choose to consolidate debts, using a DIY approach or going through your bank, you can combine all of your unsecured debts into a loan. This means credit cards, payday loans, personal lines of credit can all be combined into one monthly payment. When applying for a consolidation loan via a bank, your credit rating and income will be used to determine whether you’ll be able to qualify for the loan.
Consumer proposal and bankruptcy – During an insolvency, you will either repay a portion of your debts (consumer proposal) or your debts will be wiped clean (bankruptcy). Here are the debts that can be included in the insolvency process:
- Credit card balances
- Medical bills
- Retail store credit cards
- Unsecured personal loans
- Past-due income tax debt
- Unpaid utility bills
One misconception about insolvency is that all debts will be wiped clean. Here is a list of debts that cannot be included, even if you file for insolvency:
- Your mortgage
- Car loans
- Alimony payments
- Child support payments
- Court fines and penalties
- Student loans (unless you’ve been out of school more than 7 years)
Whatever option you choose to deal with your debt, an LIT can answer your questions and offer a full range of debt solutions.