Money trouble can sneak up on you, which is why it’s so important to be able to see the signs. Catching money problems early can help you stay out of crippling debt and insolvency, but it can be hard to see just how much trouble you’re getting into when you’re relying on debt to get by.
Whether you identify the problem early or you’re already in over your head, there are options. Debt relief such as consumer proposals and bankruptcy are offered by Licensed Insolvency Trustees – the only professionals who can facilitate these processes.
Getting Out of Debt When You Can’t Afford to Pay
Professionals like a G. Slocombe & Associates Licensed Insolvency Trustee are regulated and provide advice and financial services, including administering insolvency proceedings to discharge you from your debt. There is an important distinction between Licensed Insolvency Trustees and companies that offer debt consolidation and other types of financial products geared at people with lots of debt.
Early Financial Warning Signs
If you catch any of these early warning signs, you can fix the problem on your own, but you have to take steps now.
1) You use your debit without knowing that you have money available on it, and it has been declined in the past.
2) You find that you can’t pay the full balance on your credit card every month, and you start carrying balances forward.
3) You overspend each month because you don’t have a budget or you can’t stick to the budget you have. It can help to rethink your budget, instead turning it into a spending plan to avoid the psychological response we have to the idea of a budget.
4) You don’t have an emergency fund saved in case of injury, medical emergency, or job loss.
5) You’re only making minimum payments on your credit card bills.
Signs You Should Seek Debt Relief
If you notice any of these problems in your personal finances, it’s time to make an appointment with a bankruptcy trustee to discuss your options.
1) You’ve used a balance transfer, i.e., moving debt from one credit card to another, to refinance debt. Many do this to take advantage of low or 0% interest rates, but if your debt outlives the limited time zero interest payments, you’ve only delayed the problem.
2) Your minimum payments are too large and you can’t afford to make them. You may need to calculate all of your various debts (credit cards, bills, payday loans, etc.) to find how much per month you really have to spend. One rule of thumb is that if your minimum payments are over 20% of your income, they are too large to reasonably afford.
3) You’re dealing with debt collectors, wage garnishments, or other legal actions to collect debts that you owe.
There are many reasons that people go into debt. Seeking debt relief is not a personal failure, but a smart way to solve your money problems. Debt relief options like bankruptcy and consumer proposals recognize that sometimes it is impossible to pay back all of the debt you owe with interest. Insolvency allows you to honestly repay what you can to your creditors while giving you a chance to start over financially.