Strategies to Pay Off Debt

Debt payments can be a big demand on household income, and this is a key reason why paying off debt is a high-priority financial goal for many consumers. Everyone’s personal situation and needs are unique when it comes to ‘how best’ to deal with debt though, and it’s important to remember that the types of debt, balances, and personal circumstances you have will greatly impact the pros and cons of your options.

If you are looking for ways to pay off your debt, you might consider some of the following strategies.

Do-It-Yourself Debt Payment Plans: If you don’t have a lot of debt or other demands on your finances, you may be able to clear your debt with a self-directed plan and some careful budgeting.

• After listing all your debts, you may choose to prioritize paying off certain debts first based on factors such as debts with the highest interest rates, or debts with the lowest balances.
  • You might also benefit from contacting your creditors to try to negotiate lower interest rates on your debts.

Keep in mind that if it would take you longer than five years to pay off your debt, you may find yourself paying a lot in interest over time – and if you don’t have enough money in your budget to accumulate savings at the same time you’re paying off your debt, you’ll be especially vulnerable to unplanned costs setting you back.

Compare Your Debt Options

Enter your total amount of debt (excluding mortgage and car loan) and we’ll show you a list of options.

Refinancing Your Debt: You may be able to save some money on interest costs by combining eligible debt balances into a line of credit, consolidation loan or even a ‘balance transfer’ to a different credit card with a lower interest rate.

• This type of debt solution doesn’t come with any special benefit besides repaying your debt at a lower interest rate – you’ll still repay all your debts in full, with a bank collecting interest and other financing fees for lending you the money to pay off your other creditors.
  • You’ll likely need to leverage equity in a major asset or rely on a relationship with a family member or friend willing to co-sign for you to use this type of solution, both of which can be highly risky.

Debt Repayment with a Credit Counselling Program: If you have only a few basic consumer debts with low balances, a debt repayment plan offered by a credit counsellor may allow you to repay your debts in full without ongoing interest charges.

• Credit counselling plans don’t cut balances, they just (usually) freeze future interest charges.
• Always confirm whether you have any debts that would need to be paid separately to the credit counselling payments.
  • Any government creditors (such as Canada Revenue Agency for example) will not accept credit counselling program payments and will continue to charge interest and pursue you for payment.
• Make sure the amount you will save in interest costs is greater than the credit counsellor’s fees. Even non-profit credit counselling plans cost money!

Solutions to Pay Off Your Debt Faster

When it comes to ways to reduce, settle, cancel or forgive your debts, there are a few potential options to do this, though it is very important to understand that in Canada the only way to safely, legally cut your debt is by working with a Licensed Insolvency Trustee.

• Licensed Insolvency Trustees are Canada’s only federally-regulated debt help professionals, specifically trained, and certified to provide consumers debt advice and debt management services.

Making a Consumer Proposal

(Only available through working with a Licensed Insolvency Trustee)

If your total (non-mortgage) debts are under $250,000, a Consumer Proposal could be an ideal choice to consolidate and cut your debt.

Consumer Proposals are one of the most popular solutions offered by Licensed Insolvency Trustees and can provide you significant advantages in managing debt, including:

• Consolidated debts are frozen, and there are no added interest costs.
• Debts are often cut by up to 50-80%.
• Your credit history is not a qualifying factor.
• Your creditors will be bound by the accepted Consumer Proposal and cannot change their minds, nor pursue you for collections, wage garnishments, etc.
• You can pay off your Consumer Proposal early at any time without penalty.
• There are no added professional fees added in or on top of your debt payments.
• A Licensed Insolvency Trustee will work with you throughout the process, and handle communication with your creditors.
  • A Consumer Proposal can ONLY be filed by working with a Licensed Insolvency Trustee. Don’t be fooled by ads for services that sound similar but are offered by a credit counsellor, debt consultant, or debt settlement agency.

Consolidating Debt with a Consumer Proposal: Step-by-Step

Negotiating Debt Settlement

(May be able to do on your own, or with a debt consultant)

If you have cash on hand, you may try to negotiate with your creditors, offering them a lump sum of money to settle your debt for less than the total balance you owe. Some people also try to work with a debt consultant for this type of debt reduction service.

• Extreme caution should be used with any debt settlement company. Not only will you be charged fees for these services (or even unnecessary services or referrals), but some also employ high-pressure sales tactics, make unrealistic promises, and encourage strategies that can aggravate your situation with your creditors.
  • For example: You might be told to stop making your debt payments so you can instead save up money to accumulate a lump sum settlement to be offered to your creditors. In the meantime, you have no protection from creditors, who might start collection or legal action against you due to their debts going unpaid.
• Review any contracts or agreements carefully before signing, and never send money before researching the company.

Filing for Bankruptcy

(Must be administered by a Licensed Insolvency Trustee)

If your situation is such that you have very minimal income, or other extenuating circumstances that make any sort of debt repayment a hardship, you may want to explore whether bankruptcy could be the best option to forgive your total debts.

Although many people are anxious about the idea of declaring bankruptcy, or fearful they will not be able to recover financially, the reality is that personal bankruptcy is a relatively straightforward and private legal process that offers debt relief and a financial fresh start.

• Filing bankruptcy will immediately trigger a freeze for your creditors and in as little as nine months you can be discharged (released) from bankruptcy with all your debts forgiven, allowing you to move forward with your life.

Is Personal Bankruptcy Right for Me?

Getting Debt Advice

Most people don’t know what resources they have available for support in managing their debt, and this often means people have a series of trials and errors before a debt repayment plan that gives them good results. Unfortunately, these false starts or unsuccessful attempts to manage debt can be not only discouraging, but also come at a cost to finances, time, and personal wellbeing.

If you’re dealing with anything debt-related, a Licensed Insolvency Trustee is the most appropriate resource to seek out and should be your first contact.

You don’t have to navigate the complexities of managing debt alone or pay money to get complete information and qualified advice from an expert. In an hour’s free consultation a Licensed Insolvency Trustee can help you fully understand your situation and all your options.

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– Jayvee Lester De Castro

I highly recommend Sands and Associates especially Jennifer Thom. If you have problem with you debt. She will give you the best options and support throughout the process. – Jayvee Lester De Castro – 1 day ago 

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– Jarrod Barratt

I’ve been having financial hardship for quite some time now and I am pleased I reached out to Sands & Associates recently. They were very quick to get started on helping me with relief and I never once felt judged in the process. Omer and Jennifer were very polite and informative in the process and I thank you very much for your help and support. I would recommend Sands & Associates to anybody looking for some flexibility in their financial struggles. – Jarrod Barratt – 2 days ago 

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– All the good things

I found Jennifer Thom to be very helpful and friendly going over my options to get my debt dealt with. I felt welcomed without judgment and she made my stress and anxiety lessen which was huge for me. Thank you for your help and I look forward to a new future where I can be in control and not worried about how I’m going to survive debt. All the best. Will recommend. – All the good things – 2 days ago 

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– Saba N.

Sandra was amazing from start to finish with my consumer proposal. From answering questions and getting back to me in a timely manner when I knew she was very busy, the process was quick and painless. Paying this off will be great and then I can build up my credit again! Thanks again, Sandra ♥️ – Saba N. – 2 days ago 

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– Ali D

I went to Sands & Associates because I was overwhelmed with my debt and had no idea what to do. Camille helped me set up my consumer proposal, and honestly, she made the whole process so much easier than I expected.

She explained everything clearly — what a consumer proposal is, how it works, what my monthly payment would look like, and what debts would be included. She never made me feel embarrassed or judged, just supported.

Because of her, I finally feel like I have control over my finances again. She walked me through every step, answered all my questions, and made sure I fully understood what I was signing up for. I’m so relieved and grateful.

If you’re thinking about a consumer proposal or just don’t know where to start with your debt, talk to Camille. She’s patient, caring, and really knows what she’s doing. Highly recommend! 🙌 – Ali D – 2 days ago 

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– Shubham Batra

I had an exceptional experience with Sands & Associates during one of the most stressful periods of my life. I was overwhelmed, anxious, and unsure of where to turn, but the team treated me with genuine care and understanding from the very first moment.

Helen was absolutely amazing, patient, compassionate, and incredibly knowledgeable. She made everything easy to understand and helped me feel supported at every step. Hashan was also extremely helpful and kind, always quick to respond and guiding me with professionalism and empathy.

Thanks to both of them, I finally felt relief and clarity during a really difficult time. I’m truly grateful for their support and highly recommend Sands & Associates to anyone who needs trustworthy help and real compassion. – Shubham Batra – 2 days ago 

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– Emilee Stonehouse

I am very happy I got to work with Sand & Associates. It has been making life so much easy dealing with the debt I had. Plus working with Dana, and everyone there has been a delight to move things forward and easier. Thank you Sands & Associates! – Emilee Stonehouse – 3 days ago 

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– ga wa

Great and quick communication
Selina helped me with my case.
Was so stressed, quick responses from her helped me calm down.
Thank you so much Selina
You are awesome – ga wa – 4 days ago 

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– Jenna Sullivan

Working with Carolyn was an absolute relief. From our very first conversation, she made what could have been a stressful situation feel manageable and even hopeful. She explained everything clearly, answered all my questions with patience and understanding, and made sure I felt supported every step of the way. Her professionalism and compassion made a huge difference, and I’m incredibly grateful for her help. I would highly recommend Carolyn and Sands & Associates to anyone who needs guidance and wants to feel truly cared for through the process. – Jenna Sullivan – 4 days ago 

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– Deep Brar

I can’t thank Sands & Associates enough, especially Jagdip Dial, for helping me through one of the most stressful times in my life. I was buried under debt and didn’t know where to turn, but Jagdip treated me with genuine kindness and respect from day one.

He walked me through every detail of the consumer proposal process, explained everything clearly, and never once made me feel judged. Because of his patience and guidance, I finally feel like I can breathe again and start rebuilding my life with confidence.

If you’re struggling with debt and feeling hopeless, please reach out to Jagdip and the team — they truly care, and they’ll help you find a way forward. – Deep Brar – 4 days ago 

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Should I Get Professional Debt Help?

If you feel like you might have a debt problem – you’re probably right! It’s best to connect with a Licensed Insolvency Trustee as early as possible, doing so can save you a lot of frustration (and money). Although we do help people facing urgent situations such as wage garnishments and legal action, we also offer professional advice, guidance – and debt-free plans – to people who feel stuck in a debt cycle, or may be facing debt warning signs such as these:

• Struggling to pay your debt off even though you make regular payments.
• Continually relying on your credit to meet costs of living and financial commitments.
• A debt repayment plan that’s going to take longer than five years.
• Feeling generally stressed, anxious or worried about your debt.

Every consumer should know that they have the right to connect directly with a local Licensed Insolvency Trustee in their province:

• You do not need a referral to speak with a Licensed Insolvency Trustee, and BC residents can book a free, confidential consultation with a local Sands & Associates Licensed Insolvency Trustee.
  • All our services are available in person, over the phone, or online.
• You are under no obligation to continue working together, and there is no impact to your credit history, and no hidden fees.

Get non-judgmental advice on dealing with debt – and solutions that work. Book your free confidential consultation with a caring local expert today.

The post What Can I Do to Pay Off my Debt? appeared first on Sands & Associates.

Dealing with debt can feel frustrating, but the truth is that debt is often a problem like many others in that it does have solutions – and knowing is not owing! 

Types of Debt Management Plans 

Debt management plans for personal debt generally fall under one of the following categories:

• Do-it-Yourself Debt Repayment Plans
• Informal Debt Repayment Plans
• Formal Debt Management and Debt Relief Solutions

As Licensed Insolvency Trustees, one of our key services is providing consumers a complete, unbiased overview of all their options and resources to help them deal with their debt, tailored to each person’s situation. In less than an hour we can help you with a personalized debt-free plan that’s right for you.

Depending on your specific situation, unique needs, and personal goals, you might have several solutions and tools to consider implementing as part of your debt management plan – including five of the most common types of consumer debt solutions detailed below.

Do-it-Yourself Debt Management – Pros and Cons

Some debt repayment strategies you might undertake on your own as part of a self-directed plan could include solutions such as: 

Paying Your Debt Off in Full

Pros:

• Beyond a balanced personal budget and the ability to stick to it, no outside help is needed.
• You may be able to informally negotiate with your lenders to get reduced interest rates on your various accounts.
  • Be sure to ask about any credit rating impacts if your interest rates are reduced.

Cons:

• If it’s difficult for you to consistently pay substantially more than your minimum monthly payment requirements each month, it could take a long time to see a zero balance on your debts.
• Without ample savings, even a small upset or added demand in your budget can easily derail your plans and set you back in your debt-free goals.

How to Balance Your Budget to Pay Off Debt and Cut Money Stress – Learn More 

Refinancing with a Consolidation Loan

Pros: 

• Consolidation loans typically have a lower interest rate than credit cards, and this may reduce your total interest costs as you work on clearing your debt.
• No more juggling multiple debts and payment due dates.

Cons: 

• Consolidation loans, especially at ‘best rates’, are often difficult to qualify for. Most people will need to pledge an asset as collateral against the loan, or get a co-signer, and both of these approaches can be risky.
• You’ll be repaying eligible debts in full – with interest, which means your payments (even with a reduced interest rate) can still be difficult to afford, and carrying debt remains expensive.

Additional Tips for Success:

• You may also be able to get out of debt faster with a combination of ‘do-it-yourself’ payments and resources, such as BC’s Statute of Limitations, Request for Communication in Writing and more.
  • A local Licensed Insolvency Trustee in your province will be able to guide you in this.
• Avoid using your credit accounts while you work on paying down your existing debt. Continuing to rely on credit after taking out a consolidation loan often results in a bigger debt problem since you’ll now have a consolidation loan and credit card bills to pay. 

Learn More about Why Borrowing Isn’t Always Best for Consolidating Debt

Credit Counselling and Debt Settlement – Pros and Cons

As a Canadian consumer it’s important to be aware that although there are different types of debt help agents operating in the market and offering debt solutions, they are not created equal – and some come with significant ‘buyer beware’ disclaimers. One common (informal) debt repayment solution you might be aware of is:

Using a Credit Counselling Service

Pros: 

• If you only have a small amount of basic consumer debt you may be able to simplify your finances by consolidating eligible debts in an informal credit counselling plan that requires monthly payments for up to five years.
• You’ll pay off all your debt, but eligible creditors may agree to stop charging interest.
• It’s much easier to qualify for a credit counselling program than a consolidation loan, and you won’t need to use an asset as security or get a co-signer.
• Educational resources and workshops for money management may be available as part of the credit counselling process.

Cons:

• Creditors who turn down your credit counselling debt repayment plan must be paid separately.
  • Government creditors (like Canada Revenue Agency or ICBC) will refuse to participate in ALL for-profit and non-profit credit counselling programs and will require their debts to be paid separately, plus interest charges.
• A fee is charged for credit counselling services on top of the settlement payments to your creditors. Even if you receive relief from future interest charges, you may not cut payments substantially since you will be paying a fee on top of paying back 100% of your debt to your creditors.
  • No government body regulates credit counsellor qualifications, fees or dispute mechanisms.
• Credit counselling organizations are heavily bank-funded and some are registered as collection agents, which creates a conflict of objectives / conflict of interest.
• Your credit history will reflect your credit counselling plan for two to three years after you have repaid all the accounts included in your credit counselling plan.

Debt settlement agents may call themselves credit counsellors, but their debt repayment plans usually differ in that they offer services to settle your debts one account at a time for less than you owe by negotiating a lump sum payment that is typically less than the balance owing. (You can also attempt this type of settlement on your own if you have a lump sum available.) 

Credit Counselling or Debt Settlement? What’s the Difference? Learn More

Credit Counselling Cautions to Note:

• Credit counselling is an informal (i.e., not legally regulated) option – anyone can call themself a credit counsellor without any specific training, so the onus is on the consumer to always do their due diligence.
• Agents who provide informal debt repayment plans cannot offer you any protection from your creditors and neither debt settlement agents nor credit counsellors can compel your creditors to accept their services / your offer.
  • Creditors aren’t legally bound by these offers; they can continue collection action or even escalate collection efforts.
• Most debt settlement agents charge a high fee for their services, and all credit counselling plans have a cost, even if you are working with a non-profit agency.
• Don’t be fooled by misleading advertisements – there is no such thing as a “government debt grant” or “government debt program”.
  • The only government-approved debt solutions or providers in Canada are the legal debt management options available by working with a Licensed Insolvency Trustee.

All Licensed Insolvency Trustees in Canada offer free, confidential debt consultations – simply reach out directly to a local Licensed Insolvency Trustee in your province.

Learn More About Canadian Debt Relief Services 

Debt Relief and Consumer Proposals – Pros and Cons 

Canadians have two kinds of formal debt management and debt relief options to consider, making a legal debt solution a good choice to help pay off debt for a variety of situations and financials goals.

Making a Consumer Proposal 

Pros:

• You can write-off a large portion (often up to 50-80% or more) of your consolidated debts (including government debts) with no interest charges or additional costs of administration.
• Legally prevents your creditors from contacting you for payments or continuing collection actions or wage garnishments.
• Flexible payment terms based on household income.
• Professional fees are included in what you repay – no fees added to your settlement offer.
• Can be paid off in full at any time without penalty.
• Credit rebuilding tools and one-on-one money management education with a qualified financial counsellor are included in the process.

Cons:

• Your credit history will temporarily reflect that you did a Consumer Proposal, for three years after you have completed the Consumer Proposal, or six years from the date you started it (whichever comes first).
  • Most people establish a positive credit history within a year or less, and you can apply for and receive new credit any time. Prepaid and secured credit card products are also always available.

10 Facts You Should Know About Consumer Proposals – Learn More

Filing for Personal Bankruptcy

Pros:

• You may write-off as much as 100% of all your debts with zero interest.
• Bars creditors from contact, collection activity or wage garnishments.
• Most people who are considered to have a ‘low-income’ will only pay an administrative fee of $2,700 (broken into a manageable payment plan).
• The bankruptcy process typically lasts only nine months – the fastest time to “debt-free” compared to other options.
• Financial management tools and credit coaching with a qualified financial counsellor are included in the process.

Cons:

• Your credit history will reflect your bankruptcy filing for six years following your discharge (exit) from bankruptcy. However, with the right actions most people are successful in establishing new credit within one year after a bankruptcy proceeding (if not sooner).
  • If other options are unsuitable, the ‘reset’ of bankruptcy generally provides a quicker path to rebuilding your credit history, and overall finances.

To Use a Legal Debt Solution:

• Only a Licensed Insolvency Trustee is authorized to help you with legal debt solutions that can forgive a portion, or all, of your debt.
  • Don’t be confused by advertising for informal debt management plans that is made to sound like a Consumer Proposal, always ask “Are you a Licensed Insolvency Trustee?”
• You don’t need to get or pay for any of the following:
  • A referral to speak with a Licensed Insolvency Trustee
  • Any ‘add-on’ service when you’re working with a Licensed Insolvency Trustee
  • Financing to do a Consumer Proposal

Don’t rely on second-hand advice or information, take an hour to talk with a Licensed Insolvency Trustee about your specific situation and options. We often help people who waited months or even years before reaching out because they had the wrong advice or incorrect information.

When is Filing for Personal Bankruptcy the Best Option? Learn More

Getting Reliable Debt Advice from a Qualified Professional 

There’s a lot to consider in deciding how to deal with your debt and understanding which solution is the best for you and your situation, but you are not alone – Licensed Insolvency Trustees are here to help break the information down, offering you support in making a choice to move forward.

Licensed Insolvency Trustees are the only federally regulated debt professionals, and we hold a unique designation and endorsement, with a specific skillset and knowledge that allows us to offer complete debt help services to consumers and business owners dealing with debt.

There are many reasons why you might want to seek debt advice from a Licensed Insolvency Trustee, including (but not limited to):

• Understanding your rights and remedies when it comes to your debt, with solutions for everything from credit cards to personal loans, payday loans to CERB debt and beyond.
• Knowing what you can do when you cannot pay a debt, or whether a debt is collectable.
• Seeking debt relief, including protection from creditors pursuing you with court actions and garnishments.

Get started with your debt-free plan by contacting a Licensed Insolvency Trustee local to your province to set up a free, confidential consultation. If you’re in BC, Sands & Associates can help you from one of our local offices, or a convenient phone or video appointment.

At the end of your consultation, you should have a better understanding of your situation and your options, with a clear outline of your next steps. Taking the first step of asking for help can be one of the toughest – but it’s worth it, and there is light at the end of the tunnel.

Ready to get started? Understand, compare, and choose your best debt option with the help of a caring, licensed debt help professional at Sands & Associates. Book your free consultation now!

The post Comparing Debt Management Plans – Pros and Cons of Consumer Debt Solutions appeared first on Sands & Associates.