Some people may think that people with debt problem are reckless spenders, but it is a problem that can affect the most organized person. Debt repayment is an issue that affects many Canadians. Debts may result from sudden job losses, medical problems, and unplanned expenses, such as car repairs. When you combine these debts with common household bills and mortgages, they become a heavy burden that weighs down many people. Aggressive debt restructuring can help reorganize your debts and give your peace of mind.
The Benefits of Debt Consolidation
Increased Cash Flow
This has to be the main benefit of debt restructuring. Debt restructuring frees up cash that you can use for necessities, such as paying the rent or mortgage and providing food to your family. For instance, a client with $50,000 of unsecured debt may be paying between $1000 and $1500 in interest every month. After restructuring, that figure can reduce significantly. It is not uncommon to find clients paying $250 after restructuring. Most clients greatly improve their cash flow and can therefore set up an emergency fund while beginning to plan for their financial future.
Reducing the Period of Debt Payment
If you only make a minimum payment, it can take 20 or even 30 years to clear the debt, especially if the interest rates are high. A properly formulated debt restructuring plan enables clients to clear their debts within 5 years. What’s more is that effective debt restructuring means you trade your credit card and line of credit payment for one nice easy monthly payment, further reducing stress.
Improved Mental Health
Carrying debt can place a heavy toll on your mental health due to the constant pressure of high monthly payments. The stress can be high if you don’t have sufficient funds in your account so restructuring the debt can relieve this pressure. Aggressive debt restructuring relieves the pressure of making large payments every month. A lot of our clients express improvements in their mental health and attitudes after going through the restructuring process.
We get clients who are extremely negative and disillusioned by the hefty debts they have to clear every month. Months after the restructuring, the same clients call us expressing satisfaction and confidence in life. They feel that they are in control of their finances and can plan for the future.
Improved Business Performance
Most business people struggle when debts start to accumulate and from there it can spiral. Restructuring the business debt so that the payments can be made out of revenue, allows the business to get a breath of fresh air and start to record positive cash flow. Once the burden is lifted, it is not uncommon for a business to take on new life.
A New Beginning
For some people, aggressive debt restructuring presents an opportunity to start life afresh. This is because most Canadians accumulate debt during the most hectic times of their life. Some may have been going through a divorce, or a medical emergency may have triggered the borrowing frenzy. For others, it is poor money management and financial decisions that they regret. Whatever the case, debt restructuring gives clients the freedom to reorganize their life.
Debt Restructuring Options
A consumer proposal is a formal legal option that allows the client to offer a consolidated and reduced amount to their creditors. Creditors have an opportunity to accept the proposal. The amount of monthly repayment depends on several factors, which include income, family size, and non-discretional expenses. This option is a great way to deal with debt because it literally becomes a new and binding contract with your creditors. This means you do not have to change your proposal amount if you begin to make more money or other fortuitous opportunities come your way while still in the proposal. Further to that, in a proposal you do not have to surrender all of your assets to a bankruptcy trustee. In other words, you keep your estate intact.
Bankruptcy is a legal provision where a debtor surrenders all their non-exempt assets to a trustee. The trustee sells these assets to repay the creditors. Canadian federal and provincial laws allow debtors to exempt some of their assets from the debt recovery process. Even after declaring bankruptcy, the debtor is still required to make payments and go for financial counseling.
The amount of the payments depends on the income and size of the household. The length of the bankruptcy can be either 9, 21, 24, or 36 months.Licensed Insolvency Trustees have a number of responsibilities to the creditors which includes obtaining the best possible return on behalf of the creditors.At 4 Pillars, our duty is to work solely to our clients best interest. As a result, very few of our clients find the need to file bankruptcy and 97% of our clients compete their debt restructuring payments.
Debt consolidation involves collecting all your debts and managing them in one bundle. It involves identifying all your credit card payments and loan obligations and putting them in one package. The most popular method of consolidation is debt refinancing offered by banks. The bank clears all your debt obligations with the other creditors and requires you to service a single loan.
How to Restructure with Minimal Credit Impact
Debt restructuring can have an impact on your credit score. It is imperative to first understand that getting out of debt and improving your monthly cashflow is top priority. Money lost paying interest to creditors is gone forever, yet credit can be rebuilt with relative ease, and we help our clients with that.
If you are struggling to service your debts, you can talk to us about the aggressive debt restructuring options available to you. We are client focused and unlike other companies, we do not represent any interests of the creditors nor do we receive funding from creditors. We understand the challenges of carrying large amounts debt and will work quickly and effectively to help put a plan in place that helps eliminate the stress, putting you on a path to a brighter financial future.