For many Canadians, credit cards can quite easily become relied on for most of our finances. Whether it is groceries, shopping at the mall, or gas for the car, it is all too easy to let credit card debt rack up. Currently, there are around a whopping 76.2 million credit cards in circulation in Canada. If you want to gain credit card debt relief, in this article we share how it can be achieved. Perhaps you wish to negotiate your credit card debt relief, or would prefer to have a Licensed Insolvency Trustee take care of it for you. As the only professionals in Canada legally able to file all forms of debt relief, they are well placed to assess your options and advise you on a pathway forward. When you are struggling to make the minimum payments on your credit card, the sooner you tackle the issue, the better. In this article, we share all the various ways on how to get rid of credit card debt.
How does credit card debt rack up so fast?
It is no secret that credit card debt can be difficult to manage. It is, after all, a revolving kind of credit. This means that you can borrow funds as and when you need them. Doing so can make your repayments difficult – they will vary each month depending on what you have spent, and so if the balance is high it can be more difficult to repay. Many Canadians can end up in a credit card debt cycle whereby they live paycheque to paycheque, with any expenses going on credit card. Credit cards also come with notoriously high interest rates. If your balance is not paid in full each month, you will soon begin to accumulate interest charges on top of your debt. This can make repaying your credit card debt much more difficult as time goes on. Repaying hefty credit card debts just by making your minimum payment is very difficult to do and can take years. For this reason, it is best to confront your credit card debt as soon as you can by finding an appropriate debt relief solution.
How to negotiate credit card debt relief yourself
When it comes to negotiating credit card debt relief yourself, we refer to speaking with your credit card lender to negotiate on the interest rate you are being charged. By lowering this rate, more of your monthly payments can go towards paying off the principal of your debt instead of the interest fees. There is no obligation for credit card companies to agree to this. You should also be careful about the timing you choose to negotiate. The best time will be when your credit card balances are low, and you are current on your payments. It is worth a try as you have nothing to lose. Negotiating is usually only best if you are behind on your payments – if you need your credit card debt cleared, one of the debt relief options below is your best bet.
How to reduce or clear your credit card debt
If your credit card debt is beyond late and you simply cannot keep current on your minimum payments, you likely need support. No matter of negotiation will help in this scenario, as you likely need to reduce or eliminate your credit card debt altogether. The sooner you seek out the support of a Licensed Insolvency Trustee, the likely the more options you will have available to you. Make sure to find reputable experts to help. At Spergel, we have been helping Canadians to gain debt relief for over thirty years. Below, we have listed some of the most popular methods of gaining credit card debt relief.
Debt Management Program (DMP)
A Debt Management Program – or a DMP for short – is a structured repayment plan provided to you by a credit counselling agency. The goal is to condense your unsecured debts – including credit card debt – into one simple monthly payment. It is ideal for those who just need some temporary relief on their payments, or support in structuring their debt. There is no need to borrow any additional funds – you simply work with a credit counsellor to determine a realistic budget. This will then help to determine a reasonable amount of repayment you can afford each month. Your credit counsellor will then attempt to negotiate with your creditors to have their debts added to the Debt Management Program with the interest rate reduced where possible. If they agree, you will work on repaying your debts within three to five years. Although DMPs work for many Canadians, it is important to note that creditors are not legally bound to agree unlike consumer proposals. DMPs will also have an impact on your credit score.
Orderly payment of debt program
If you live in either Alberta or Nova Scotia, you might be eligible for consolidation via an orderly payment of debt program. Although other provinces used to offer an orderly payment of debt, this has recently stopped due to the rise of credit counselling and non-profit support. In an orderly payment of debt program, you repay the full amount of debt that you owe. This usually takes place over a period of around three years. The interest rate on your unsecured debt is fixed at 5%. Your creditors are obliged to agree to it, and the courts must approve the program. Another advantage of an orderly payment of debt program is that you are able to keep your assets.
It may be that you need a legal form of debt relief to substantially reduce your unsecured debts. Licensed Insolvency Trustees are the only professionals in Canada legally able to file all forms of debt relief. A consumer proposal is a legal form of debt settlement. When it comes to how to get rid of your credit card debt, it can reduce your debt by up to 80%. You work with a Licensed Insolvency Trustee to suggest an affordable monthly repayment to your creditors. Your Licensed Insolvency Trustee will then work to negotiate with your creditors on your behalf. If accepted, you will only need to make your manageable monthly repayments for a period of up to five years. Other advantages of a consumer proposal include the ability to keep your assets and protection from your creditors via a stay of proceedings. At Spergel, we have a 99% acceptance rate on any consumer proposals we file. This means that you have a 99% chance of having your debt reduced by up to 80% if you file a consumer proposal with us.
If filing a consumer proposal is not the right option for you, and you would prefer complete clearance of your unsecured debt, filing bankruptcy may be the right form of debt relief for you. Bankruptcy is the process of assigning any non-exempt assets you may have over to your Licensed Insolvency Trustee in exchange for clearance from your debts. These assets will then be sold with any proceeds going towards the repayment of your creditors. Bankruptcy is the best way to achieve a fresh financial future, and it is often much quicker than a consumer proposal. Other advantages of bankruptcy include protection from your creditors, and the ability to keep some essential assets under a threshold laid out by your province of residence. Unlike other bankruptcy firms, at Spergel, you are assigned a Licensed Insolvency Trustee to support you every step of the way through the bankruptcy process, instead of being passed from person to person.
If you want to know how to get rid of credit card debt but are feeling overwhelmed by your options, book a free consultation with a Licensed Insolvency Trustee at Spergel. We will review your financial circumstances and recommend a debt relief pathway for you. Having helped over 100,000 Canadians gain debt relief, we are well placed to help you on your journey to getting rid of your credit card debt.