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Clearing Up Problematic Credit Card Debt

Posted on 12 July 2017

Most of us have them. Credit cards can be so convenient and often make life easier when it comes to doing anything from making hotel reservations to ordering things online. However, as credit card debt increases overtime, the risk to your cash flow and overall finances becomes a major downside of that convenience.

When you can’t pay your total balance at the end of the month, this is the slippery slope that may sound all too familiar:

  1. You get a credit card at 14% interest (1.16 monthly as it compounds monthly).
  2. You use it to finance a big-ticket purchase that you don’t have the cash to pay for outright. For the sake of an example, let’s say that purchase is $3,000.00, so now your balance is $3,000.00.
  3. When your bill comes in, your minimum monthly payment due is only $60.00 (based on 2% of the balance) and the interest on the card was $34.30. That may not seem so bad, and it means you don’t have to pay it all at once, so you pay the minimum and forget all about it until next month.

For many, this is common, and what sounded promising with one card, becomes problematic when many cards, and higher credit card debt limits, are introduced. The reality is, to get this card paid off quickly, you will need to pay far more than your minimum monthly payment. If you can’t, and are finding even those payments difficult to stomach, it may be time to think about how you can remedy the issue.

This is where taking a good hard look at your finances comes in. Do you have the money to just pay off your credit card debt? Do you have any home equity you can leverage to get out of debt? If you have answered no to both questions, then you may want to consider some other solutions, such as a consumer proposal.

In a consumer proposal:

  • A Licensed Insolvency Trustee (LIT) reviews your income, assets, and debts;
  • Based on a financial calculation that the LIT performs, a proposal amount will be formulated;
  • Your repayment of this amount will be divided over monthly installments over a term of not more than 5 years;
  • If accepted by the majority of your creditors, you will begin making the consumer proposal payments;
  • The proposal can be paid in full at any time; and
  • The proposal is removed from your credit report 3 years from the date it is paid in full.

Proposal benefits include:

  • It often reduces the overall amount of debt you owe;
  • Allows for a single payment that is usually less than past payments to credit cards;
  • Stops interest; and
  • Stops most collection action such as wage garnishments and frozen bank accounts.

A consumer proposal represents a very valuable relief option when credit card debt becomes unmanageable. If these debts are keeping you up at night, Spergel can help.

Call to schedule a free consultation today: toll free 310-4321.

Helpful starting information:

What to Bring to an Appointment

To get the debt help that you need, please bring a list of who you owe and how much to each, a list of everything you own and your monthly household budget. Don’t have everything right away? Don’t worry – We will guide you through each step.

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Your Information

We’ll walk you through our application process. But, if you want to prepare for your debt free assessment consultation in advance, download our information form and fill in what you can.

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Calculate Your Debt Repayment Options

How can you compare your debt repayment options if you don’t know how much they will cost you? Your solution will become much clearer when you are able to compare costs.

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Ready to Be Debt-Free?

If you’re ready to be debt free, it’s time to meet with one of our knowledgeable Licensed Insolvency Trustees at your convenience and get started

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