On Saturday January 17 Ted Michalos and I appeared 570 News to talk about how to deal with credit card debt. Our Cambridge office gets a lot of phone calls after the Christmas season from people with more credit card debt than they can deal with, so I always welcome the opportunity to go on the radio and answer questions about how to deal with credit card debt.
On the show I was asked how to deal with credit cards and other debts. The advice I gave on the show was the same as the advice I give when I met with people privately in my Cambridge office.
First, you must make a list of all of your debts, and prepare a simple monthly budget. By making a list of everything you spend each month, it’s easier to see what expenses can be chopped, which is the first step to getting back on track financially. For many people cutting expenses is enough to free up cash so that they can pay their debts on their own. If you can’t cut enough expenses to increase your cash flow to pay off your debts, the next possible solution is credit counselling.
With credit counselling a not-for-profit credit counsellor creates a debt management plan where you repay all of your debts, at a reduced or zero interest rate.
Of course one option is to file personal bankruptcy. However most people I meet with in Cambridge want to explore all options before considering bankruptcy, so I always mention filing a consumer proposal, which is often the best strategy for dealing with credit card debt. A consumer proposal is a deal, or a settlement, that is negotiated with your creditors. If you have $50,000 in debt, it may be possible to negotiate a settlement where the creditors accept 50 cents on the dollar, or $25,000, over up to a five year period. For example, a proposal of $500 per month for 50 months would be accepted in most cases by the creditors. In some cases it’s possible to get proposals accepted for 30 cents on the dollar, or even lower, depending on your monthly income.
As I said on the show, there are options, so to find out what option is best for you, give us a call at 310-PLAN (310-7526), no area code required, or e-mail me to schedule a free initial consultation.
Comments on this entry are closed.