Canadian household debt levels hit record highs again, raising alarms as to how many more Canadians will soon find themselves unable to pay their debts. Figures just released by Statistics Canada indicated that the debt-to-income ratio for Canadian households increased to 163.4% in the second quarter of 2012. Debt levels of this magnitude are of deep concern. Canadians households are stretched thin already, and heavy debt burdens are putting more Canadians at risk of financial default in the event of interest rates increases, unemployment or other economic hardships.
If you are one of the many Canadians with high debt, whether you are barely making ends meet or are already getting calls from collection agencies, you have alternatives. Creating a personal budget and contacting your creditors to negotiate some relief can be a first step. Seeking help from a credit counsellor, entering into a debt management plan, negotiating with your creditors via a consumer proposal, or filing for bankruptcy in Canada are also possible options. The trick is to take immediate steps to reduce your debt. Start by assessing your situation and come up with a plan to deal with your debts as soon as possible.
Start by making a list of your debts. How much do you own and to whom? If you think you can pay your debts off on your own over time start by making a personal budget. Review all of your income and expenses and see where you have room for improvements. Divide your expenses into three categories: needs, wants and desires. Needs are obviously things like food, shelter, necessary clothing etc. Wants are thinks that are options, but which you can likely afford — things like your cell phone, your cable bills, eating out. Can you find ways to cut back on the cost of some of these items? Look long and hard at the desires category — trips, luxury items, that new pair of designer shoes. Do you really have to have these or are you being pressured by today’s advertising? Would you be better off postponing these purchases to the future or looking for alternatives — perhaps the second hand store? Once you have a list of your debts, start reducing those debts step by step.
If you are unable to reduce your debt on your own, seeking professional help is your next step. In Canada, you can talk to a trustee in bankruptcy who will not only explain how to file bankruptcy in Canada but will explain all of your debt relief alternatives.
Posted by Editor Bankruptcy Alternatives @ 8:32 pm