The COVID-19 pandemic has caused many individuals to run into unexpected difficulties managing their debt. Canadians have notoriously been known as people who carry heavy debt. Canadians carry the highest amount of debt when compared to all other countries in the G7.
Employment loss is one of the major factors of financial difficulty during the pandemic. 213,000 Canadian jobs were lost in the month of January 2021. There are several individuals now facing tax debt because they were unaware of declaring CERB payments as income on their taxes. There are also many individuals who improperly received government payments.
You Don’t Have to Drown in Debt
Income loss or unexpected new debt may be the last straw that tips your finances over. Financial restructuring is a perfectly dignified and legal way to deal with debt payments that are unmanageable.
There are many different ways to restructure debt. The best option for you will depend on your assets, amount of debt, credit, and more. Some examples include:
- Selling assets.
- Refinancing assets like your home to consolidate debt (this would require equity).
- Other debt consolidation (requires good credit and if unsecured will often involve higher interest).
- Consumer Proposal – through a consumer proposal you can reduce the amount of money you have to pay back towards your overall debt. The amount you pay back will be based on a variety of factors and can be a significant reduction.
- Bankruptcy – in bankruptcy generally your monthly payments are based on your income and if there are any assets that need to be considered. Your surplus income determines the length of your bankruptcy. The sum of your payments in bankruptcy will almost always be far less than the total of the debt.
Whether you are borrowing more money or leveraging other options like a consumer proposal, you will need the help of a financial professional. A skilled financial restructuring expert will be able to present all available scenarios for your situation.
For example, if you owed $100,000 in debt and had a home that had $40,000 equity, a skilled financial restructuring expert would be able to tell you:
- If you have enough equity to borrow against your home.
- If you sold your home, what could a restructuring plan then look like?
- If you kept your home but leveraged an option like a consumer proposal to offer your creditors an amount that is repaid monthly to satisfy your debts, what would it be?
This is what we are trained to do; assess your financial portfolio and provide you with the best recommendations. At Douglas Loiselle and Associates, we don’t charge for an initial consultation. Consulting a trustee is often the fastest way to gain insight towards clear paths you can take to restructure your debt.