My credit cards are maxed; my line of credit is non-existent; and I avoid the phone so I don’t have to speak to my creditors. I’ve reached my limit and need help getting out of debt. The only problem is I don’t know where to go for help. Every time I turn around there is another organization or individual offering me “the best way to get out of debt”; “reduced interest rates” and “lower payments”. It’s all so overwhelming and I don’t know who is offering a real solution and who is trying to sell me a pipe dream. How do I identify the right solution for my needs?
Squamish, British Columbia
This is a great question, and one our counsellors get asked all the time. As debt continues to be a major consumer issue in Canada, an increasing number of organizations are opening up shop to help you find the debt relief you need. For most, this is overwhelming and makes the road to financial freedom all the more confusing.
While you are the only one who can decide what debt relief solution is right for your unique financial situation, I can provided you with some information to help you understand which solutions are too good to be true.
If we are being honest, charging up a pile of debt can be a lot of fun – and at times effortless. But on the other hand, paying off that debt is hard work. The problem is, because of our “Buy Now, Pay Later” consumer mentality , Canadians are now carrying record high debt – and an increasing number of debt relief organizations have popped up to “help” indebted consumers like you.
While many of these organizations do a great job in facilitating a healthy financial future for their clients, others are in the business of taking advantage of vulnerable consumers without providing any real help.
Gary, if your goal is to eliminate debt and develop the skills to build a financially healthy future, then you need to be careful of debt relief options that:
- Offer blanket recommendations – As I have already alluded to, there is no such thing as a one-size-fits-all debt solution. You should always be wary of agencies that do not take the time to review your personal financial situation and discuss all your debt relief options.
- Make unrealistic claims – If a debt relief organization claims to be able to lower your debt by 80 percent or remove negative information from your credit report, I advise you to turn around and walk out the door. Getting out of debt just isn’t this easy and no organization has the power to remove accurate information from your credit files.
- Have minimum debt requirements – We always advise clients to steer clear of any debt relief organization that requires you to be carrying a minimum amount of debt. No two financial situations are the same, and any organization offering legitimate debt relief should be willing to help you regardless of how much money you owe.
- Direct you to limit your creditor communications – Indebted consumers, such as yourself, should never be required to limit or cut off communication with creditors. Even if you are making payments through a debt relief program, you should still be able to speak directly with your creditors.
The stress of dealing with unmanageable debt can be daunting for most consumers. But before signing up to a “get out of debt fast” or any other debt relief program, it’s important to do your homework. Researching the various solutions offered by debt relief programs can go a long way in helping you determine the best solution for your individual financial needs.
And Gary, regardless of what solution provides you with the debt relief you need. I would recommend looking at programs that will provide you with the tools and skills you need to change your money management behaviours and build a healthy financial future.
Jeffrey Schwartz is the Executive Director of Consolidated Credit Counseling Services of Canada and President of the Credit Association of Greater Toronto (CAGT).
If you have a question about budgeting with kids in the household or just about finance in general, Jeff is here to help. Send us an email with your question to AskJeff@ConsolidatedCredit.ca. You’ll get the expert advice you need and your question may be featured here on our website.