It’s one thing to be behind on your credit card payments. It’s another to be insolvent. Read this to find out how people get into serious debt, and what to do if you’re in this critical financial stage, too.
What to Do When You’re in Serious Debt:
If you don’t think any kind of budgeting or credit counseling will get you out of the money pit, you should go to a licensed insolvency trustee. They can look over your financial situation to see if you should be filing for a consumer proposal or a personal bankruptcy to resolve the extensive list of payments.
The consumer proposal process is ideal for people who have large assets like houses and vehicles. Applying for bankruptcy can be a beneficial move for people who don’t have these assets. The methods may sound intimidating, but they’re better solutions than letting the debt grow and follow you everywhere you go.
What Makes People Get into Serious Debt?
Living Beyond Your Means
One of the common reasons behind serious debt is using borrowed money to pay for things that you can’t afford. This means making big purchases like houses, cars and luxury items despite the fact that your income can’t cover the costs. Trying to keep up with the Joneses can come with significant financial consequences.
Things like sudden employment loss or illness can shake up your financial situation, especially if you don’t have the savings to cover the expenses. During these stressful periods, people often turn to credit cards or loans until they gain more stability.
Gambling addiction or a compulsive shopping disorder can land someone into deep financial trouble, especially when they have no way to control their destructive behaviour. Getting enough money to pay off debt isn’t enough. If the addiction isn’t addressed, they can repeat the scenario all over again.
Filing for divorce isn’t a cheap process. Couples need to pay for legal fees, which can be quite expensive if the process isn’t amicable.
Going from a double-income household to a single-income household is also a massive change. Keeping up with mortgage payments, insurance and utility bills alone can be devastating. And it’s more complicated when you have children. However, the process doesn’t have to be so difficult. With the help of EZ Name Change, you can determine how to go about changing your child’s last name in case you file for sole custody.
Post-secondary school is incredibly expensive. Without financial assistance, most students wouldn’t be able to access higher education whatsoever. What’s worse is that most students feel like they don’t have much of a choice. The current job market heavily favours applicants with post-secondary degrees.
Sometimes grants and scholarships can help ease the burden of schooling costs. But all-too-often, people have to take out thousands of dollars in student loans in order to pay for their tuition. These can take years and years to pay down.
As you can see, it’s not that difficult to become insolvent. Simple things like applying for higher education, ending a relationship, getting sick or losing a job can severely impact your personal finances. The only thing that you can do is create safety-nets and practice responsible spending habits to keep yourself stable. And if that doesn’t work and you still get into trouble, you can go to a licensed insolvency trustee to take your first step toward recovery.