How to Fast-Track Your Path to Debt Relief in Ontario?

Posted on May 25, 2023 by Mihir (Mike) Chande, CPA, CA, CIRP, Licensed Insolvency Trustee

Are you burdened with bad debt and searching for fast relief in Canada? If yes then you are landed on the right page.

In this guide, we will walk you through effective strategies and practical steps to help you get rid of bad debt swiftly and reclaim your financial freedom.

Dealing with bad debt can feel overwhelming and suffocating, but rest assured that there are actionable solutions available to you. Whether you’re struggling with credit card debt, personal loans, or other forms of financial obligations, this guide will provide you with the knowledge and tools necessary to tackle your debt head-on.

From understanding the impact of bad debt on your financial well-being to exploring debt relief options and implementing effective debt repayment strategies, we have you covered. 

So, let’s dive in and discover how you can eliminate bad debt and pave the way for a brighter financial future in Canada.

How to Start Fixing Your Debt Relief in Ontario Canada? 

To start on your road to financial recovery, there are a few steps you can take to take stock of your situation. Many Canadians are unaware of how much they owe, so this is a crucial process.

1. List Out All Your Debts

The first step should be to identify everything that you owe. Go through your financial records and list every debt you have. 

Take note of the total amount owed for each, the minimum monthly payment and the interest rate. It is critical that you ensure to list all debts as you need to see the complete picture of your financial situation.

Include any of the following (if applicable):

  • Credit cards
  • Mortgages
  • Car loans
  • Personal loans
  • Lines of credit
  • Student loans
  • Tax debt
  • Unpaid utility bills (electricity, television/internet, cell phone)
  • Payday loans
  • Loans from friends and family
  • Spousal or child support you owe
  • Any other unpaid bills

2. Review Your Budget & Cut Expenses

In the next step, you should make a budget. Figure out how much money you earn, spend and save. Compare your income with your expenses and determine which expenses you can cut or reduce.

Reviewing your budget can be a very efficient way to repay your debt faster. Prioritize your expenses, putting the needs before wants and identifying which are unnecessary. You can then use this extra money to put toward your debt.

It will take time and effort, but it is an essential step that can give you valuable insight into your situation.

3. Decide on a Debt Settlement Strategy 

Once you have a good overview of your finances, it’s time to decide on a strategy. Different strategies are available depending on what kind of debt you have and how much you own.

You have to look at a timeframe which you find reasonable and affordable. Decide which debts you want to pay off first, which often will be the debts with the highest interest rates to save on additional interest.

You can also look at the debts with the lowest balance; paying off debt quickly can give a sense of accomplishment that should not be underestimated. It can serve as motivation to continue pursuing your goals.

Debt Relief Options for Canadians 

Canadians have various debt relief options, with benefits and drawbacks. So let’s have a look at some of them.

1. Debt Management Program or Debt Payment Program

In a debt management program, you consolidate all of your debt into one debt consolidation loan, using the funds to pay off your different debts so that you can focus on one monthly payment at a lower interest. 

The advantage is that you don’t need the help of anybody else. Still, the most significant drawbacks are that depending on your credit and payment history, you may not qualify for a loan or may have to bring assets, such as real estate, as security.

It also does not address the underlying debt problem and could lead to more financial issues.

2. Debt Settlement Program

In a debt settlement program, you work with a debt fix counseling agency that will work with you to determine an affordable monthly payment. 

Once this plan is established, they will contact your creditors to eliminate or reduce interest charges on your balances. You will then pay the agency monthly, distributed among your creditors.

3. Debt Relief Options with Insolvency 

Let’s first briefly define what insolvency is. In simple terms, insolvency means that you can no longer meet your financial obligations. In this case, there are two options available.

3.1 Consumer Proposal

A consumer proposal is a legally binding agreement between you and your creditors in which you negotiate a settlement for a portion of the debt you owe. Through the service of a Licensed Insolvency Trustee, you review your financial situation to determine how much of your debt you can afford to repay.

The first step is to meet with a Licensed Insolvency Trustee, who will thoroughly review your financial situation, including all income and assets, debt, due dates, interest rates etc. 

Together with you, they will determine how much of your outstanding unsecured debt you can afford to pay back and prepare the proposal. 

Once a proposal is filed, all legal action and interest will cease immediately, and you will make monthly payments as agreed to in the proposal. After all payments have been made, the remainder of your debt will be discharged, up to 80%!

Please note that a consumer proposal can only cover unsecured debt, such as credit card or tax debt, personal loans and student loans (depending on their age). A consumer proposal cannot include any secured debt like mortgages or car loans.

2. Bankruptcy

Bankruptcy is widely seen as the last resort option when you have accumulated so much debt that you can’t even pay back a part of what you owe. For this, you will need the services of a Licensed Insolvency Trustee, who will evaluate your financial situation by laying out all income, debt and assets. Any assets not eligible for exemption must be surrendered to the LIT to be sold to generate funds to be distributed among your creditors to cover at least part of the debt you owe. Any remaining balances will be discharged.

Consult with Agency to Fix Your Debt Relief Faster

Negotiating debt can be stressful and challenging, especially if the burden of your debt is growing. While there are some steps you can take yourself, it is critical for you to know all options available as mentioned above.

The experienced Licensed Insolvency Trustees of Chande Debt Solutions are focused on personal debt relief and insolvency services. We know that filing a consumer proposal or bankruptcy are serious matters, and we want to ensure that you are well informed and don’t rush into any solutions. All of our consultations are free, without time limits.

Call us today at 416-366-3328 or fill out our convenient online form to learn how we can help you recover financially.

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Mihir Chande
Mihir (Mike) Chande, CPA, CA, CIRP, Licensed Insolvency Trustee Mike, a Chartered Accountant, began his insolvency career in the Corporate Insolvency and Restructuring group at one of Canada’s largest insolvency firms. After gaining extensive experience, he founded Chande Debt Solutions to offer personalized and empathetic debt relief services to clients seeking an alternative to traditional solutions.

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