I just read an article in the Financial Post, that stated Canadians would rather incur more debt to fund their monthly cash flow shortfall than to seek the advice of a professional.  As a Licensed Insolvency Trustee (“LIT”), and thus a professional in debt solutions, I recommend anyone overwhelmed by their debt to consult with a LIT before incurring more debt.  If your credit rating is poor, new debt likely comes with a high interest rate that will ultimately worsen your future cash flow.

young woman holding maxed out credit card

The initial assessment for a detailed analysis of your financial situation and possible solutions is free of charge with Taylor Leibow Inc. and most LITs.  In a non-judgmental, compassionate manner, we will review your assets, debts, monthly income and expenses and explore the following debt relief solutions:

  • Budget to pay your debt in full. This solution may require you to reduce some discretionary expenses (like entertainment) to enable you to afford monthly payments to pay off your debt.  The trustee will advise of two debt payment strategies:  pay off the lowest debt first to reduce the number of creditors or pay down the highest interest-bearing debt to minimize total interest costs.
  • Debt Consolidation Loan – borrow an amount to pay all of your debt in full and be left with one monthly payment at a lower interest rate (loans typically bear a lower interest rate than credit cards).
  • Debt management program through a not-for-profit credit counselling agency – agency negotiates with your creditors to accept payment in full over a four-year time period (with interest) and you make one monthly payment to the agency who in turn distributes amongst your creditors.
  • Consumer proposal – an insolvent person can offer a compromise to their creditors payable over a maximum of five years. The proposal includes the trustee’s fees to administer the proposal, allows you to keep your assets and stops all interest and collection proceedings by creditors.
  • Bankruptcy – a bankruptcy stops creditors from pursuing you for payment of your debt and will stop most garnishments of income. The trustee realizes on any assets that have equity above exemptions and you may have to make surplus income payments depending on your family income and household size.

If you had a health concern, you would consult with a doctor.  If you have concerns about your debt, contact Taylor Leibow Inc., Licensed Insolvency Trustee for a free, initial consultation in St Catharines.

Kathy portraitBy Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency
and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)