How do I Clear Up Debt in Ontario?

When you are in debt, you might feel frustrated, sad, depressed and even angry. Getting into debt is easy these days, with the accessibility of credit cards, loans and other lines of credit. Getting out of debt is the hard part. Even if you are in over your head, there is no unsolvable debt problem. You can get the help you need and regain control of your finances. If you live in Ontario, Canada, and are struggling to get out debt and get on track financially, there is a process to help clear up your debt.

Instructions

1

Obtain a copy of your credit report. This is the essential first step to take. You might think you have a good idea of where you stand financially, but you can never truly be sure until you see your credit report. There are two major credit bureaus for Ontario residents: Equifax and TransUnion. Contact both for a separate copy of your credit report, as each might display different debts.

2

Cut up your credit cards. Although you are already in debt, it can still be hard to fight the temptation of overspending on credit cards. This is spending money you do not have, so the best idea is to cut the cards up and get rid of them. According to Liz Pulliam Weston, a personal finance columnist for MSN Money, the average American household has over $9,300 in credit card debt alone. It is fine to keep one credit card for making purchases online, for business and other purposes, but having multiple credit cards can be unnecessary and unwise.

3

Start contacting your creditors. The worst thing you can do is nothing. This shows creditors you have no interest or care regarding your debt and you are ignoring the problem. They will likely send your debt to a collection agency, damaging your credit as a result. You might not know exactly how to deal with your debt yet, but you can inform them you are in the process of dealing with your debt, and arrangements are being made.

4

Seek help. Credit counseling services and financial advisers are all over Ontario. Take a visit to your bank, and speak to a financial adviser regarding your debt, or call a credit counseling service that caters to Ontario residents. This helps relieve your stress and give you a professional in finance to talk to. They can look at your credit report and other financial documentation, do a proper assessment of your current situation and offer advice.

5

Apply for a debt consolidation loan. This is one of the more common methods of dealing with debt in Ontario. A debt consolidation loan pays off your outstanding debt, and you are left with only a single loan payment to make each month. This is easier and more convenient than trying to keep track of multiple bill payments each month. You usually get a lower interest rate with a debt consolidation loan as opposed to a credit card or line of credit. To apply for a standard debt consolidation loan, you need personal identification showing your name, address and a color picture as well as a recent pay stub from the last 30 days.

6

File for bankruptcy. Bankruptcy is a word no one wants to hear, but sometimes filing is the best way to get out of the hole. To decide whether bankruptcy is right for you, weigh the pros and cons first. The main advantage of claiming bankruptcy is it stops all collections actions by creditors. Bankruptcy is beneficial to those who owe a large amount of money to multiple creditors. It gives the chance to start anew and start rebuilding your credit. However, your credit report will have the mark of bankruptcy for up to 10 years. Any time a potential lender or even employer reviews your credit rating after you file for bankruptcy, they see this.

7

Sign up for budgeting or personal finance courses. Learn budgeting and money management skills that can help you in the future. Become more knowledgeable on how to plan your money. This is a proactive step to prevent future debt problems.