How to Get Rid of Debt in Canada

More Canadians are getting deeper into debt. According to Bankruptcy Canada, in the 12 months ended Sept. 30, 2009, a total of 116,295 Canadians declared themselves bankrupt. This figure represents an increase of 36 percent over the previous year. While these figures may not be encouraging, it is still possible to get rid of debt and avoid going bankrupt with determination and some help from experts.

Instructions

1

Make a list of your debts. Write down the amounts you owe, starting with the biggest one. Include the names of the creditors, the interest rates and the minimum monthly payments.

2

Create a budget. In a worksheet, list your sources of income, housing and living expenses and payments. After making a list, make sure that your expenses do not exceed your income. If they do, then this is where you need to cut corners, separating your needs from your wants. You can download a budgeting workbook from the Credit Counselling Society (see Resources).

3

Spend less than you want to. You may want to put off buying some items that you don't really need, or consider going from a two-family car to one. This will free up some money which you can use to pay off your debts.

4

Pay off your most expensive debt first. Prioritize paying off that one debt that charges the highest interest, and make minimum payments on the rest. After paying it off, proceed with the next most expensive debt and continue with this method until you've paid off all your debts. This will leave you with the least expensive debt, which is usually your mortgage.

5

Increase your income. Look for a second job that you can handle, on top of your first job, or work overtime. Use the extra money to pay off your debts.

6

Find out if debt consolidation will work for you. Inquire from several financial institutions about the debt consolidation loans they offer. This loan will allow you to pay your debts to several creditors at once, at an interest rate lower than that charged by your creditors. You will then have to pay only one creditor---the financial institution.

7

Seek the help of a credit counselor. Check out credit counselors in your community that offer this service free of charge. Non-profit organizations may charge minimal fees. Credit counselors will help you find ways to deal with your debt problem. Before dealing with a credit counselor, check first with the Better Business Bureau to find out if any complaints have been filed against the person or organization (see Resources).