You have a pile of unopened bills sitting on your desk. You have a notification of another missed call from the bill collector on your phone. Your stomach turns with dread every time that you think of looking at your bank account and checking how much money you have left for the month. You’re in debt, and you’re panicking about how to get rid of it.
You wish you could blink, and then all of the overdue bills and growing interest would disappear. Why can’t you find a quick debt fix and put the whole ordeal to rest?
The reason why this can’t happen is that quick debt fixes are too good to be true. Read about five popular fixes that people turn to when they’re desperate to deal with their debts and the problems that come with them.
Quick Fix 1: A Surprise Windfall
Maybe you buy lottery tickets every week in hopes of winning the jackpot. Maybe you’re praying for a sudden inheritance from a distant relative to come through. Or maybe you’re hoping you’ll land a dream job with a substantial pay-raise. Essentially, your big plan to paying off everything you owe is getting a windfall.
While it’s normal to daydream about these types of things, they should never be part of your real financial plans. The odds of winning the lottery are minuscule. Landing a dream job without actively searching and applying for it is unlikely to happen. And waiting to come into a distant relative’s inheritance is improbable and not the nicest thing to hope for.
You can’t rely on luck to help you with your finances. Praying for a miracle is not going to get you anywhere. If anything, it will let you dig deeper into debt.
Quick Fix 2: Debt Consolidation Loans from the Bank
You have the option of applying for a debt consolidation loan from your bank as a way to get rid of your debt. Debt consolidation means that you combine all of the debts that you owe to different creditors into one monthly payment.
So, what’s the problem? Well, the first thing that you should know is that it’s very difficult to get approved for one of these loans. You will have to have a steady income, good credit, and strong home equity. If you don’t have strong home equity, you will need a cosigner — this is a person who guarantees that they’ll take full liability for the loan if you can’t make the payments. Since you’re dealing with heavy debt, you’re unlikely to meet their standards for credit scores and home equity.
If you do manage to get approved, you should know that there are some really big risks that come with this solution — ones that could send you even deeper into debt. For instance, if you use your home equity and miss payments, you could end up losing your home.
Quick Fix 3: Debt Consolidation Loans from Alternative Lenders
You could look for a debt consolidation loan from a private lender. They’re likely to have lower standards for approval than the bank. But, the problem with private lenders is that they tack on steep interest fees that will make the loan incredibly difficult to pay off. The move could send you further into debt, giving you yet another creditor to worry about.
Quick Fix 4: Debt Management Program
A debt management program is a service offered by credit councillors. A councillor is supposed to contact your creditors and negotiate a better repayment agreement for you. They can ask for the creditors to lower your rates or remove penalties to make the situation easier on your wallet.
So, what’s the catch? While credit councillors are honest workers, they cannot make a legally binding agreement with creditors. A creditor can back out of the agreement whenever they like. Councillors also can’t stop your creditors from taking any legal action against you for the purpose of collection. As you can see, debt management offers no 100% guarantee that it will be effective.
Is There a Quick Fix for Debt?
The truth is that there is no quick fix. Debt is a complicated situation, and unless you come across a magnificent change in income, you aren’t likely to resolve the issue in a matter of weeks. It takes time and perseverance to tackle your debts. You should be extremely suspicious anytime you see an offer for an easy and speedy solution for this issue.
So, What Can You Do?
Your best bet is to go to a licensed insolvency trustee firm like David Sklar & Associates for help. A licensed insolvency trustee is a government-approved professional who offers a variety of services for people struggling with debt. They are licensed by The Superintendent of Bankruptcy. They are closely monitored by federal regulators.
Creditor agreements though these trustees are considered legally binding. To sum it up, they’re as legitimate as it gets.
If you’re dealing with a smaller amount of debt, you can go to the firm for credit counselling. The services can help you focus on different goals like managing debt, budgeting money and building good credit habits.
You might want to consider filing for a consumer proposal if you’re dealing with a larger amount of debt and you want relief. The proposal is an agreement with your creditors that lowers your debt total and gives you a maximum of 5 years to handle repayments. Then, they are considered paid in full. In the meantime, you won’t suffer from consequences like interest, late penalties, collection calls, and wage garnishing.
And if all else fails, you can ask a trustee about filing for personal bankruptcy. It’s not ideal, but it’s better than continuing to struggle with debt or following false promises from predatory lending practices.
You should never look for a quick fix when it comes to debt. It’s not just because these all-too-easy options over-promise or outright lie about what they can do. It’s also because they won’t address the problems that got you into debt. If you still have your bad habits, you can jump right back into trouble in a few years. With a licensed insolvency trustee, you can resolve your debt and stay out of it.