Can I Negotiate A Debt Settlement By Myself?

Most Canadians struggling with debt are very concerned about costs and often wonder if they can implement a Debt Settlement plan by themselves. This is a great question that at face value is simple to understand but when you dive into it is quite complicated.

This article is a series about Debt Settlement. We recommend you start from the beginning. The other articles are linked below:

Part 1 – What is Debt Settlement

Part 2 – How Do Debt Settlement Programs Work?

Part 3 – Can I Negotiate A Debt Settlement By Myself? – You’re reading this now

Part 4 – What Is The Cost Of Debt Settlement?

Basics of Debt Settlement

We have written another article that goes into the basics of debt settlement. In a nutshell, the goal of debt settlement is to have a creditor accept less than you owe on a debt to fully settle the debt. For example, your creditor may accept to receive $1,500 as payment in full instead of the $3,000 you actually owe them.

Because this process is simple in theory many people think they can do this themselves. There are a few things to consider before trying to negotiate yourself.

1. Is this the right debt solution? – Debt Settlement has many pros, but it also has cons. It is not the right solution for everyone. We have seen countless clients who have attempted to settle their own debts without consulting a debt professional and have unfortunately made their situation worse. You really need someone to outline every option. Most people who think debt settlement is the best option would be better served by a consumer proposal or bankruptcy.
2. Negotiation is hard – Think about it – creditors are trained at collecting as much money from you as possible. Most of us are conditioned to pay our debts as they are due. Because of this it often creates very unfavourable negotiating conditions. A professional Debt Settlement company removes this completely by being a third-party.
3. Debt Settlement can be complex – It may sound silly but knowing who to call, which department to speak with, what words to use, and how to frame your situation are only a few of the complexities you will encounter when trying to settle your debts. A professional debt settlement firm will often have this down to a science where they can predictably estimate the end-result.

Before You Try To Negotiate a Debt Settlement Yourself

Before attempting to negotiate your own debt settlement, we urge you to consult a debt professional to learn all of your options. Debt Settlement is arguably one of the most risky debt options that exist. This is because of the informal nature of the nature of debt settlement programs. Make sure you are educated on the options.

Debt settlement is only one option to deal with debt. We are one of Canada’s largest independent debt restructuring firms and have helped restructure billions in consumer debt since 2002.

The post Can I Negotiate A Debt Settlement By Myself? appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/can-i-negotiate-a-debt-settlement-by-myself/

How Does A Debt Settlement Program Work?

Debt settlement programs have existed in Canada and Nova Scotia for a very long time. Their goal is to help save money on interest, fees, and principal balance. Of course, every situation is different, but there the basic process remains the same for everyone who signs up for a debt settlement program.

This article is a series about Debt Settlement. We recommend you start from the beginning. The other articles are linked below:

Part 1 – What is Debt Settlement

Part 2 – How Do Debt Settlement Programs Work? – You’re reading this now

Part 3 – Can I Negotiate A Debt Settlement By Myself?

Part 4 – What Is The Cost Of Debt Settlement?

Debt Consultation & Settlement

Your first step is to speak to a debt professional to know if a debt settlement program is right for you.

Oftentimes, due to the pros of a debt settlement program, consumers think it is the best option for them. However,  after looking at the specific situation, another option is better suited in many cases. These options include debt consolidation, credit counselling, consumer proposal, or even bankruptcy.

Most debt settlement firms only work with larger amounts of debts, generally more than $10,000. When debts are lower than this, other debt options may be more suitable. Such as an extensive budgeting plan, credit counselling, or even a consolidation loan.

The Debt Settlement Negotiation

If, after speaking with a debt professional, debt settlement is the right choice for you then you will typically engage the services of a debt settlement firm. The goal of the firm will be to reduce the amount of principal amounting owing to creditors and not just simply reduce interest rates. The firm will typically outline an estimation of debt reduction. Once they have given you this number you will typically be required to save this amount of money (and potentially slightly more) for the firm to then work with, and negotiate on your behalf.

The amount that the debt settlement firm can reduce your debt depends on a variety of factors. While most consumers have a very hard time negotiating settlements themselves, a professional, reputable firm can reduce debt anywhere from 20 to 80 percent depending on the circumstances.

Except in the rarest of circumstances, only unsecured debts such as personal loans, lines of credit, and credit cards can be reduced in debt settlement programs. Secured debt like car loans and mortgages typically cannot be reduced.

The Payment Process

Because you are typically required to save up a lump-sum of money before a debt settlement firm will begin working with you the payment process is quite simple. Once the money is saved it will be sent to a Trust account, typically administered by a law firm for safety, who will only release funds according to strict instructions you agree to.

In most cases, creditors are worked on as a group but due to varying factors may not be settled at the same time.

After the Last Creditor Is Paid Off

Once your final creditor is paid off you will typically receive a final report that outlines original debt loads, settled amount, amount saved, fees charged etc. You should also receive confirmation letters of settlement. These will be your back-up in the instances a creditor or collection agency attempts to pursue you for the settled debts in the future.

If all of the funds in the Trust account have not been used they will also be returned to you.

How Does Debt Settlement Affect My Credit?

The overwhelming majority of people who are struggling with large debt loads believe the only way out is Bankruptcy. While this is potentially the right option in some situations the majority of people are able to avoid bankruptcy entirely if they desire.

There is no debt restructuring option, including debt settlement, that is free from a credit impact. Depending on which option you choose the actual time frame your credit is impacted is what changes.

Debt Settlement actually has one of the lowest impacts on credit, when done properly. The reason for this is because typically speaking your accounts will be marked as either Paid or Settled and then closed. Assuming you have entirely cleaned up your credit report this will allow you to begin rebuilding credit immediately, with no issues. It is important to note that if done incorrectly debt settlement can have extremely negative impacts on your credit. This is why it is important to consult a professional.

Find Out More

If you are struggling with debt and are considering a debt settlement program you should definitely consult one of our Debt Relief Specialists to determine which debt relief option is best suited for your situation.

Debt settlement is only one option to deal with debt. We are one of Canada’s largest independent debt restructuring firms and have helped restructure billions in consumer debt since 2002.

The post How Do Debt Settlement Programs Work? appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/how-do-debt-settlement-programs-work/

What is Debt Settlement?

Debt Settlement is a type of debt relief to settle your debts for pennies on the dollar and get you out of debt. You’ve probably seen advertisements and are perhaps skeptical. It will probably be good to hear that debt settlement programs are actually legal and can be a legitimate debt solution. However, what isn’t well known is what it actually takes to initiate such a program. Here’s a hint – it normally requires a lump sum of cash. This process can be used to avoid debt solution options such as a consumer proposal or filing for bankruptcy.

It is important to note that 4 Pillars Consulting Group is not a Debt Settlement company. However, we are experts at debt restructuring and are very familiar with the debt settlement process. Don’t want to figure out the best option on your own? Let us help – we have been assisting consumers to figure out their best options since 2002. After your free consultation, if Debt Settlement is the correct course of action we can connect you with a Debt Settlement Firm that we know and trust.

This article is the beginning of a series of articles discussing Debt Settlement. As we add articles, we will link them below.

Part 1 – What is Debt Settlement – You’re reading this now.

Part 2 – How Do Debt Settlement Programs Work?

Part 3 – Can I Negotiate A Debt Settlement By Myself?

Part 4 – What Is The Cost Of Debt Settlement?

The Basics of Debt Settlement

The first step of debt settlement is to hire a debt settlement company that will negotiate with your creditors on your behalf. It is important to pick a good company as the goal is for this company to get a favourable outcome for you. At the end of the day, you will want your debt settlement company to assist you in paying back less than you owe. This, of course, allows you to pay your debt off much quicker.

Typically speaking, the company will ask you to stop making payments to your creditors. While in the past companies would ask you to pay them monthly to allow them to accumulate a debt settlement fund you should be wary of these companies today. Most legitimate debt settlement firms will not require up-front cash in order to begin. The reason is that the length of time typically required to save up the money makes other options significantly more attractive.

The firm will then negotiate an agreement; if you agree, paperwork will be signed and the funds will be sent to your creditors. This will mark your debts as paid.

Debt Settlement Compared to Other Debt Relief Options

As mentioned above, debt settlement is not the only debt relief option available. Options mentioned above, a consumer proposal and bankruptcy, are two such options. Other options are credit counselling and debt consolidation. It is important to carefully consider which option best suits your situation.

There are several debt relief options that cause harm to your credit report. It should be noted that debt settlement also impacts credit. However, if done properly it can report less negatively on your report. The reason for this is when performed correctly most credit will typically be able to begin being rebuilt immediately.

Debt Settlement should definitely be considered as an option for debt relief. But it should not be the only option that you focus on. The downfall of a debt settlement program is it typically requires a lump-sum of money to be saved before it can be properly executed. This means it can be ineffective for many consumers.

Be Sure Before You Hire a Debt Settlement Company

A debt settlement company can indeed help you get out of debt faster than you could normally. Just be aware that in most instances consumers are disappointed with their results (or lack thereof) because of the saving component required when effectively settling debts.

If you are struggling with debt and want to talk with someone, reach out today to book in a consultation with one of our Debt Relief Specialists. Debt settlement is only one option to deal with debt. We are one of Canada’s largest independent debt restructuring firms and have helped restructure billions in consumer debt since 2002.

The post What is Debt Settlement? appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/what-is-debt-settlement/

5 Things you DON’T know about Debt Forgiveness

Each and every day we help people navigate their financial struggles. Whether someone got sick, lost their job, became separated from their spouse, or made poor decisions in the past and want to rectify them; there is always a solution to deal with debt. You hear the term debt forgiveness thrown around all the time. But the truth is that very few people know much about debt forgiveness, especially in Halifax, Nova Scotia.

Without making you wait any longer here are 5 things you DON’T know about debt forgiveness.

Debt Forgiveness is possible

By and large, the biggest thing people are not aware of is that debt forgiveness is actually something that can occur. The process first involves understanding your financial situation. You then need to determine the best possible option to deal with your debt. Once that has been completed you will proceed with your chosen debt relief method. If your creditors agree to the new amount, they ‘forgive’ the difference between what you owed and the newly agreed-upon debt amount.

You don’t have to go bankrupt to get debt forgiveness

It’s true! Bankruptcy is the last resort option to deal with debt. In fact, while most people think this is their only option they often have other options that suit their lifestyle better. While bankruptcy can be an effective way to eliminate debt, it comes with the harshest penalties and consequences. Instead, you may want to opt for a less-severe option such as a consumer proposal.

Debt Forgiveness comes with consequences

Wow – if I had a dollar for every time we’ve heard people say that people simply load up on debt and then restructure it to get off scot-free I would be rich. It is simply naive to think that if a creditor is willing to reduce the amount of money owed that there will be no consequences. There is a credit impact to most restructuring methods, especially those that involve debt forgiveness. While this impact might be a big deal to those who are not struggling and have good credit it is of little concern to someone who is already struggling.

Our office has personally assisted thousands of consumers to understand their debt relief options. We have never encountered an individual who purposefully tried to ‘cheat’ the system.

Debt Forgiveness isn’t free

While it is true that debt forgiveness isn’t free, the truth is that there are no debt relief options that are free in Canada. The cost ranges depending on the option you choose. Because there is a cost, you need to ensure you have someone working exclusively for you. As members of the Canadian Debtors Association, we exclusively represent consumers who are struggling with debt. We help them understand their options and assist them in implementing their chosen debt relief plan.

In Nova Scotia, we are the ONLY firm that operates in this manner. Unfortunately, most of the ‘players’ in the industry are funded directly or indirectly from creditors.

If you are struggling with debt and want an unbiased option, reach out for help. We wrote an extensive article about why 4 Pillars should always be your first choice. Check it out here.

Debt Forgiveness isn’t just for low-income earners

Most people think that only low-income earners would qualify for debt forgiveness. Unfortunately, these individuals can be more challenging to work with. Not because we don’t want to help, but because there are no free debt restructuring options (As mentioned above). As incomes get lower, it becomes harder and harder to find an affordable relief option. Even bankruptcy can become unaffordable at certain income levels.

Debt Relief, and ultimately debt forgiveness, is available to anyone who is struggling with debt that cannot seem to get ahead. It is just important to make sure you understand all of your options.

The post 5 Things you DON’T know about Debt Forgiveness appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/debt-forgiveness-nova-scotia/

What do you do if your consumer proposal is rejected?

We discussed in another article that the chances of a consumer proposal being rejected are extremely slim.

In the unfortunate event that your proposal does get rejected by creditors what are your options?

Your options become quite limited in the event this occurs. If this does occur we highly recommend you consult a professional to determine your next steps. Several factors go into deciding what is the best course of action. Which creditors you have, how your creditors voted, how your file was initially structured, why you had to file initially, your current situation, and your long-term goals.

There is no definitive ‘best answer’. While most would simply recommend bankruptcy because it is easiest there are other options that you can explore first.

Withdrawing your proposal and refiling

Anytime prior to creditor or court approval you are able to withdraw your proposal. This means that your ability to file another proposal still remains.

Be warned – if you decide to look at refiling, the stay of proceedings (legal protection from your creditors) you receive when filing ceases. You are then vulnerable to creditor collection and legal actions. The stay of proceedings does come back in force though if a new proposal or insolvency is filed.

This option mainly means you can file another consumer proposal. We have found that while this option can work it isn’t always the smartest method as if the creditors said no once, they will most likely say no again. In saying this, this isn’t always the case. Structuring the file in a different manner may provide different results and so it can be a good method.

The main factor for this is the reason why you filed paired with your long-term goals. What we mean by this is if you have a really compelling reason for filing a proposal that seemingly was missed by creditors (potentially because of whose desk it fell on) so you may want to refile to have this second opportunity. We have had several clients where it made no sense for them to file bankruptcy due to several factors. They decided to look at refiling their proposal with great results. This usually is the best option if your reason is due to health concerns or marital breakdowns that were completely out of your control.

It is important if you decide to pursue this option that your file be structured or proposed differently. You can not expect different results if you do not change things up. There are many ways to structure a file differently. Certainly too many to cover in a blog article so consult a professional.

Filing for bankruptcy

You can always opt to file a bankruptcy if your proposal is rejected. While this isn’t a suggested option (as you wouldn’t have filed a proposal if you thought bankruptcy was a better option) it certainly exists.

By the time your proposal is rejected you should know how much a bankruptcy would cost you. This number is based upon your income and assets. I cover this in-depth in our article about bankruptcy.

If you decide to file bankruptcy it will require another appointment to sign more paperwork. This paperwork will be similar to your proposal paperwork with a few differences. While this is by far the easiest option to pursue if a proposal gets rejected, and often people navigate to it because of the helpless feeling they have after the rejection, it must be a carefully planned decision to ensure you don’t end up right back where you were.

Doing nothing

What if your proposal is rejected and you do not want to refile another proposal or file bankruptcy? You can decide to do absolutely nothing, let your proposal fail, and continue living your life. While this is definitely not an option we would recommend in most situations it can make sense in extremely rare instances.

This will leave you vulnerable to the possibility of collection and legal action. Because of this, you will want to address the debt at some point. Doing nothing is certainly the last resort option – in our opinion even more so than bankruptcy, if you have already attempted a proposal.

Conclusion

A failing or rejected proposal should be an extremely rare occurrence. If you are looking at filing a proposal and you are talking to professionals feel free to ask them how many rejected or failing proposals they have seen. If they say stuff like ‘it happens from time to time’ then it probably happens far more likely than you should be comfortable with. Work with a company that takes the time to understand your goals, your current situation, and outlines the best possible way for you to get out of debt.

The post What if your consumer proposal is rejected appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/what-if-consumer-proposal-is-rejected/

Are Debt Consolidation Programs Worth It?

This is a question I am sure is asked over and over again by not only consumers but professionals as well.

While this question is probably easily answered by most, it is a loaded question. We will try to get into many of the various possibilities where debt consolidations programs may or may not be worth it.

As a general rule:

• If you can pay off your unsecured debt in 3 years or less – not worth it
• If you can pay off your unsecured debt in 3-5 years – might be worth it
• If it will take you longer than 5 years to pay off your unsecured debt – definitely worth it

This is also true even for options that might impact your credit. The reason for this is because during the debt paydown period an individual’s ability to obtain credit can be more difficult and quite frankly, unwise. It makes little sense to focus on paying down debt while also obtaining new debt. Also, obtaining additional credit simply further enhances the pre-existing problem.

This is assuming people are honest with themselves in how long it will take them. I see time and time again that people underestimate their spending which leads to improper planning. This is easy to understand though. As humans, we are naturally optimistic and want to believe we can dig ourselves out of the hole.

The answer really isn’t as simple as a quick three-liner though. Knowing if debt consolidation programs are worth it is significantly more complex than this.

When should you consider a debt consolidation program…

This is the question that we ask ourselves for each and every single person that comes in for a free consultation. While I do always agree with one of the three sentences above you really have to consider what goals you have in life. If your goal is to become debt free as quickly as possible while freeing up cash flow, and increasing your net worth as quickly as possible then consolidating, no matter the credit impacts, is an absolute no brainer. If dealing with debt isn’t your top priority AND you have a realistic plan to pay off your debt then I would keep doing what you are doing. Considering you are reading our website, I suspect your goal isn’t to stay under the burden of debt for the rest of your life.

By the way – the sentence above I always agree with is if your plan will take longer than 5 years to pay off then it makes absolutely no sense to not consider a debt consolidation program.

So when do these programs NOT make sense?

This is an equally important question. Surprisingly the answer is quite simple. If you can pay your debt off in 3 years or less with your current plan then there is absolutely no reason for you to consider a debt consolidation program.

If your plan involves selling assets to pay off debts, you should think twice. I’ve written why selling assets to pay off debt is a very bad idea in most instances. I won’t go in-depth here – take a look at that article.

The post Are Debt Consolidation Programs Worth It? appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/are-debt-consolidation-programs-worth-it/

Selling Assets To Pay Off Debt Is Not Always A Good Idea.

Have you ever wondered if you should sell your assets to get out of debt?

Are you unsure if it will actually make a difference or if there is a better option?

The ideal situation would be to keep all of your assets and get rid of your debt quickly.

Let’s discuss further.

The issue with selling assets to pay off debt

I spend a lot of time reading up on personal finance blogs, forums, and chatting with financial advisors. The recommendation to look at selling existing assets to pay off debts is a recommendation you will often receive. I don’t know how many times I have had clients come into my office having completely liquidated their savings to pay off their debt. This often is a recommendation from another financial professional.

At face value – this advice makes sense. If you have $50,000 in an RRSP account, why wouldn’t it make sense to withdraw it to pay of $30-40,000 of debt? Unfortunately, this advice is given with a lack of knowledge into all of the various debt help options.

So why doesn’t it make sense to sell assets to pay off debt? The reason is that most of the assets being used would otherwise be protected in more invasive forms of debt restructuring.

Of course, restructuring debt doesn’t come without consequences but hopefully, by the end of the article, you will understand our position.

Before we get into the scenario it is important to understand that debt restructuring is extremely complicated. There is no way this article could cover each and every situation. While we believe that in some cases it is a bad idea to use assets to pay off debt there are situations where it may be warranted. We recommend seeking a professional opinion.

The Scenario

The average client that has $30-40k of unsecured debt can expect to reduce that debt to approximately $6,000-$12,000 depending on their individual circumstances. This comes with a credit impact, which is admittedly bad (but not as severe as bankruptcy) but is certainly survivable.

So let’s look at 2 scenarios: One person who withdraws their entire RRSP which let’s say would hypothetically pay off all of their debt. And the other who restructures their debt through a debt restructuring program.

Let’s assume the individual can afford $500 p/m in either a debt payment or savings. Let’s assume the individual is 35 years old and wants to retire when they are 65.

Using assets to pay off debt

Let’s assume someone has $50,000 in RRSPs and they are looking to pay off $30,000 in debt. When they would go to withdraw the RRSP they would receive $35,000 (30% tax would be withheld upon withdrawal). Let’s assume that they pay off the $30,000 and then keep $5,000 to pay towards the extra tax they would need to pay at tax time.

Because they are completely debt-free they can now invest $500p/m into an investment account. They would end up with, at 65, $584,726.30. This is obviously a sizeable amount of money.

However….. Let’s consider what would happen had they restructured.

Using restructuring to pay off debt

Again, our typical client would eliminate $30k in debt with approximately $6k – 12k overall. Let’s assume the worst – that they have to repay back $12,000. This plan would be a five-year plan at $200 per month. They would retain their entire $50,000 in their investment account.

Conclusion

The post Should you sell RRSPs or other assets to pay off debt? appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/why-you-should-never-sell-rrsps-or-other-assets-to-pay-off-debt/

Case Study – New Family

Expecting a child can be one of the most exciting times of our lives. It can also be one of the most stressful. By far the biggest concern for most people is the financial strain. How will you afford this little bundle of joy? Unfortunately, a new addition to the family can also add debt. This case study details how 4 Pillars can help with such a situation.

Background

The young couple featured in this case study had both started out with small amounts of individual debt. When they found out they were pregnant, they decided to take out a consolidation loan to cover their smaller debts. Consolidation loans often have lower interest rates than other types of debt, like credit cards, and simplifies payment as there is only one loan to pay. They were among the 51% of Canadians who don’t have a budget. Studies show that Canadians without a budget are more likely to spend more than their monthly income and need to borrow money to pay for day-to-day expenses.

This is exactly what happened – the cards that had been paid off by the consolidation loan started collecting a balance again. They were already overspending before the baby, but now their expenses shot through the roof. It didn’t take long to max out their credit cards again and start falling behind in things like their cell phone bills. When they were brave enough to open some statements, they calculated that they were $35,000 in debt. They were shocked that they could have gotten so far into debt without realizing it.

They did a Google search for debt relief options in Nova Scotia and were impressed by the reviews at 4 Pillars Halifax. They decided to give us a call and book a free consultation.

The Plan

With their newborn in tow, they attended their initial meeting at our office. In analyzing their budget with their consultant, they realized that with their current expenses, they may only be able to afford $250-300/month in debt repayment in order to comfortably afford their living expenses. Each of their creditors were asking for near that amount each, and there were five of them.

The moment of panic was quickly relieved by finding out that there is a way to reduce the total debt load without as many of the negatives of bankruptcy – a consumer proposal. A consumer proposal, filed and administered by a Licensed Insolvency Trustee, offers their creditors a fraction of the principal with no interest, making a more affordable monthly payment. It is an agreement between the client and their creditors, so there is a chance that it could be rejected. Luckily, a proposal structured by 4 Pillars is almost never rejected.

Results

Their proposal was accepted by their creditors to pay back $10,500. The monthly payment was structured to be $175/month for 60 months, leaving them with a little extra wiggle room in their monthly cash flow. They had poor credit before filing, but 4 Pillars was able to provide the tools and advice they needed to rebuild their credit even during their proposal. They were even able to start setting aside a small amount each month in an RESP for their little one. Instead of stressing about how they were going to pay for things, they could relax and enjoy their newest family member knowing they had a plan in motion.

Conclusion

Finances are a huge part of family planning. We all want the best for our kids and will often overspend for them (usually more than ourselves!). Don’t let debt dampen your excitement of a new baby – call 4 Pillars to see how we can help.

This article was written by David Moffatt. A Senior Debt Relief Specialist with 4 Pillars Halifax. 4 Pillars has assisted in creating plans that have helped save Canadians over $1 Billion dollars of consumer and tax debt since 2002. We believe that no consumer should have to struggle with the stress of overwhelming debt. Our debt restructuring plans can help you cut your debt by up to 80% with less than 3% of our clients ever getting into deep financial difficulties again. If you are struggling with debt please reach out. It hurts to continue to suffer financially.

4 Pillars Debt Consolidation Halifax services, Dartmouth, Bedford, Sackville and the entirety of HRM.

The post Case Study – New Family appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/case-study-new-to-canada-2/

Case Study – New to Canada

People come to Canada from all over the world for a chance at a better life. Sometimes it’s a better job, to be closer to family, or just to live the Canadian dream. No one moves to Canada to accumulate a crushing amount of debt. Sadly, that was what happened to the young man in this case study. 4 Pillars was there to help guide him onto a different path.

Background

Moving to Canada was like a dream come true. It was challenging, of course, but worth it when he arrived in Nova Scotia to start a new life. He had some money saved and took a job working at a local restaurant. Next to his work was a loan company. Thinking of his barren apartment, he decided to apply for a small loan to purchase some furniture. He was surprised when they offered him $8000! What he didn’t realize was that the interest rate was 29.99%. In his current situation it could take him years to pay that back. Before long, the company began looking for payment. They were asking $500/month. This left him with very little money for rent, groceries, and other bills. He reached out to another loan company who offered him another $8000. He took it, thinking that if he could just get ahead a little bit, he would be able to catch up and pay both loans back. Interest kept accruing on both loans until they totalled nearly $18,000.

Far from his family and too embarrassed to ask for their help, he felt hopeless. He saw a post on Facebook about 4 Pillars helping people get out of debt, so he submitted his information online. We contacted him that day to discuss his situation and booked him in to meet with one of our debt relief specialists.

The Plan

Although he was nervous about attending the initial consultation, he was very glad he did. His consultant went over all his options, starting with budgeting all the way through to bankruptcy. Neither of those options made the most sense for him, so we knew it was going to be something in between. Credit counselling could be an option for him but would have him paying back the whole $18,000 plus 5-15% in fees to the credit counselling company. The interest would be reduced, but he would be paying an extra $900-2700 on top of the principal he owed. On the other hand, a consumer proposal would reduce his debt to a more manageable amount while still eliminating interest.

Both credit counselling and a consumer proposal would hurt his credit, so he opted for the method that would reduce his debt as well. A consumer proposal structured with the assistance of 4 Pillars would reduce his debt to $9000 with a monthly payment of $150. A huge drop from the $500/month payments his creditors were looking for! He left the office already feeling better about his situation.

Results

Once accepted by his creditors, this client was in a payment plan he could actually afford. There was an end in sight knowing that the debt would be paid off in 5 years (or sooner!). According to Statistics Canada, there is no evidence that immigrant families are any more likely than Canadian-born families to use payday loans. Similarly, recent immigrants pay off their credit cards at the end of each month to the same extent as people who were born here. The one area that new Canadians seem to fall behind in is accessing registered savings plans. Fortunately, part of the 4 Pillars aftercare process is setting goals to work towards.

One of this client’s goals was to set aside some money every month so he would have savings to rely on in the future. Once he was ready, he set up a TFSA for shorter-term goals and an RRSP for the long-term goal of being able to retire. This left him feeling in control of his finances and ready for the future.

Conclusion

Everyone who moves to a new country does so in the hopes of making their life better. No one moves across the world with the expectation that their situation will worsen. Debt can become an issue that makes living in a new country so much harder. Regardless of if you recently moved to Canada or have lived here all your life, 4 Pillars offers non-judgemental answers to your debt questions and guidance on what your next steps should be. Check out our 4 Pillars Halifax YouTube channel for more information or give us a call at 902-482-9748.

This article was written by David Moffatt. A Senior Debt Relief Specialist with 4 Pillars Halifax. 4 Pillars has assisted in creating plans that have helped save Canadians over $1 Billion dollars of consumer and tax debt since 2002. We believe that no consumer should have to struggle with the stress of overwhelming debt. Our debt restructuring plans can help you cut your debt by up to 80% with less than 3% of our clients ever getting into deep financial difficulties again. If you are struggling with debt please reach out. It hurts to continue to suffer financially.

4 Pillars Halifax services Halifax, Dartmouth, Bedford, Sackville and the entirety of HRM.

The post Case Study – New To Canada appeared first on 4 Pillars Halifax.

source https://www.halifaxdebtfreedom.ca/case-study-new-to-canada/

Case Study – New Homeowners

Buying a home is the biggest purchase that most of us will ever make. Unfortunately, it can often come with unexpected expenses that send your costs sky-high. The family in this case study ran into this problem – the renovations on their new home had launched them into a debt spiral. 4 Pillars was there to guide them through a debt restructuring process.

Background

This couple moved to Nova Scotia from Ontario in the pursuit of affordable housing prices. They were delighted when they were able to purchase a home within their budget. However, their delight was short-lived. They quickly realized that their lovely new home would need a new roof and a new oil tank before the coming winter. They accessed an unsecured line of credit to pay for both repairs. Their bad luck persisted, though, because both their washer and dryer needed to be replaced that winter. They decided to finance through the appliance store’s credit card. There’s a saying that suggests bad things happen in threes, and that was true for this couple as in the spring they found out that their new home needed a whole new septic system. They accessed another line of credit for this, meaning they now owed $60,000 between two lines of credit. This was on top of the $2000 they had owing to the appliance store at a 19.99% interest rate and balances on their credit cards. Deep in debt, they now were choosing between paying their mortgage and making payments towards their debt. A family member had worked with 4 Pillars in the past and suggested they contact us. Not knowing what to expect, they gave us a call.

The Plan

The primary concern this couple had in their initial consultation was preserving their credit. This was because based on their experiences over the past year, they wanted to be sure they could access credit if they needed it. What they didn’t realize, though, was that they had missed many credit card payments and had made no payment towards the appliances, so their credit was already being damaged and their debt service ratio would also prevent approval of regular lending products. In their current position they would only be able to access high interest credit products. Our goal is to get our clients to the point that they have dealt with their debt and when ready, they can access credit products that are actually going to help them and not create more debt problems.

As they had just purchased their home a year ago, they had no equity available to them that they might’ve been able to use to get ahead on the debt. After reviewing the other options available to them based on their situation, they chose to file a consumer proposal. A proposal would lift them out of debt but would also allow them to take steps to rebuild their credit while in the proposal.

Results

Their proposal was accepted by their creditors to have them pay back $19,500 of the original $65,000 they were owing. Although their credit was impacted, they were able to start rebuilding their credit while still working on paying off their proposal. As part of the 4 Pillars aftercare process, they had access to products and advice to make sure they stay on track. This includes getting a secured credit card when they’re ready and learning how to use it in a way that boosts their credit score. 4 Pillars clients are clients for life so they will continue to have support from us in their financial journey whenever they need it.

Conclusion

Most Canadians have home ownership on their list of goals, but owning a home brings risks too. Unlike renting, there’s no landlord to deal with any issues that arise with the property. Renovations are costly and are notorious for going over budget. If fixing your home has left you with a mountain of debt, contact 4 Pillars Halifax to find out what your options might be.

This article was written by David Moffatt. A Senior Debt Relief Specialist with 4 Pillars Halifax. 4 Pillars has assisted in creating plans that have helped save Canadians over $1 Billion dollars of consumer and tax debt since 2002. We believe that no consumer should have to struggle with the stress of overwhelming debt. Our debt restructuring plans can help you cut your debt by up to 80% with less than 3% of our clients ever getting into deep financial difficulties again. If you are struggling with debt please reach out. It hurts to continue to suffer financially.

4 Pillars Halifax services Halifax, Dartmouth, Bedford, Sackville and the entirety of HRM.

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source https://www.halifaxdebtfreedom.ca/case-study-new-homeowners/