Informal Debt Solutions What Are Your Options

Financial stress has been linked to relationship troubles, depression, high blood pressure and even a decreased immune response. But despite those risks, many people hesitate to discuss their situation with others. Feelings of shame or a fear of being judged lead them to think their only option is to solve their debt problem on their own; also known as an informal debt solution.

Financial stress has been linked to relationship troubles, depression, high blood pressure and even a decreased immune response. But despite those risks, many people hesitate to discuss their situation with others. Feelings of shame or a fear of being judged lead them to think their only option is to solve their debt problem on their own; also known as an informal debt solution.

This approach can be effective. However, it requires a lot of work, can quickly become overwhelming and does not guarantee a successful resolution. With that said, should you or a loved one be considering an informal debt solution, there are a few things you should consider:

The first thing you’ll need to do is review your income, expenses and current debt load to determine how much you can afford to pay your creditors. Then you’ll need to contact each creditor individually to negotiate an interest rate reduction and / or a change to your payment terms and schedule. You’ll have to explain your situation to each of them before making what you think is a reasonable offer – which they have the power to accept, or not. Once (if) you have come to terms with your creditors, you are then responsible for following through with the plan and making each agreed upon payment in full and on time.

One benefit to an informal debt solution is that you have the power to decide which creditors you want to involve. However, a creditor is under no obligation to enter into an arrangement with you. What’s more, even if your creditors do agree to an arrangement, they are not legally bound to those terms and can change them at any time. There is also the risk of running into a particularly difficult creditor who refuses to negotiate. Should they determine it necessary, they could potentially pursue legal action which may allow them to seize assets and / or garnish your wages.

If this all seems overwhelming, you’re not alone. Know that you do have other options. A formal debt settlement, also known as a Consumer Proposal, is a service offered by MNP which provides you greater protection. Through a consumer proposal, you can repay your debts with manageable fixed payments. Provided the majority of your creditors (by dollar value) accept the terms negotiated by on of our Licensed Insolvency Trustees, all of them will be bound by Federal Legislation to follow those terms. Moreover, once the Consumer Proposal has been filed, a legal stay of proceedings will be in place which prevents any future garnishees or harassing collections calls; decreasing your stress and allowing you to better focus on getting out of debt once and for all.

Trying to satisfy your creditors by yourself can be a daunting and frustrating task. If you would like to discuss your situation and see if a Consumer Proposal might be a viable debt-relief solution for you, contact a Licensed Insolvency Trustee at MNP Ltd. for a free, no-obligation consultation. Together we can discuss your options so you can make a fully informed decision as to what your best route to financial freedom may be.