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3 Useful Debt Options That Help Relieve Financial Stress

Relationships can be challenging, and financial stress can lead to difficulty in maintaining your relationship. Financial issues are a leading reason cited in divorce filings, with 59 per cent of divorcees saying finances had a role in breaking up their marriage. Working together, you and your partner can create an open and honest dialogue to ensure that you are both aware of any financial or debt problems you may be facing. With an open line of communication, you can also work to develop a plan on how to reduce debt. The three useful and professional debt options below can provide immediate relief from financial stress. Depending on whether or not you have combined finances as a couple, you may explore these options together or independently.

  1. Consolidate multiple debts into a single one with a consolidation loan 

Debt consolidation can be very effective at reducing the overall amount you and your partner pay toward your debts each month. The premise of a consolidation loan is simple. You speak with your bank or a financial lender about qualifying for a loan to combine several debts you want to pay off. If you qualify, the bank will pay off the other debts and in some cases require the credit cards or loan accounts to be closed as part of the agreement.

Consolidation loans tend to have lower interest rates compared to credit cards. The monthly payment for the single debt will also likely be lower than what you were paying before toward all of your individual debts. This provides some form of instant relief, and can free up a portion of your income toward saving or paying off the debt faster. A consolidation loan will also be paid off within a fixed time frame, unlike rotating credit such as credit cards and lines of credit, which have no fixed end date for repayment.

  1. Eliminate a significant portion of your debt through a consumer proposal

Consolidating debt, a debt management plan and credit counselling are some of your other debt relief options. But, if your debt problems are overwhelming, a consumer proposal could be the most effective option for you, as an alternative to filing for bankruptcy. To explore this debt relief option, you will need to speak with a Licensed Insolvency Trustee (LIT) in Salmon Arm.

If you choose to file a consumer proposal, the LIT will negotiate a debt repayment plan with your creditors that usually involves you paying back a portion of the debt you owe. As part of the agreed upon proposal, any legal action or harassment from creditors will stop immediately, which can go a long way in reducing the financial stress you may be dealing with. As part of the proposal, you will also have to complete other requirements, including two credit counselling sessions. Here’s a list of other frequently asked questions regarding consumer proposals.

  1. Bankruptcy can be effective for those with significant debt problems

Bankruptcy is often seen as the last resort, but it is not deserving of the stigma that generally surrounds it. It is a highly effective debt relief option, and has helped an enormous amount of Canadians solve debt problems and re-establish a better financial future.

Filing for bankruptcy must be done with the assistance of an LIT. They are licensed by the Office of the Superintendent of Bankruptcy Canada and are the only professionals who can assist you with filing for bankruptcy (or a consumer proposal). The concept is similar to a consumer proposal; you will be absolved of all your unsecured debts. This includes credit cards, lines of credit, payday loans, personal loans and income taxes. Debts such as your mortgage, car loan, and student debt—depending on how long you’ve been out of school—cannot be included in a bankruptcy filing. Here are other frequently asked questions related to bankruptcy.

These professional debt options are effective ways to help you reduce or eliminate debt and financial stress from your relationship. The sooner you and your partner decide to seek help with your debt, the more options will be available to assist you. An LIT will always work with you to develop the best solution to address your debt problems. This means you or your partner may not even need to consider a consumer proposal or bankruptcy, as your LIT will explain every debt relief option that’s available to you.

For ways you can alleviate financial stress at home, join the conversation on Twitter using #LetsTalkDebt.

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