According to the CBC, the average Canadian owes over $22,000 in credit card debt. So if you’re having trouble paying your credit card debt back, you’re not alone. The problem with accruing such a large debt is the interest. The Canadian average is 15.07%, only marginally smaller than the outrageous interest rates the payday loan outfits charge.
Following this strategy will not reduce your credit card debt because the interest will continue to accrue on the principal. Essentially, you’re just paying less now to pay more later.
If you’re in debt to multiple lenders or multiple credit cards, you can consolidate all your debts into one loan with a lower interest rate. You would have to apply for this kind of relief, but before you do, we encourage you to read the blog post we wrote about the pros and cons of debt consolidation. In it, you’ll see what consolidating debt means for your credit score, what it would cost you compared to what you’re paying now and how a Licensed Insolvency Trustee (LIT) can help you consolidate.
When you get to the point of not being able to manage your credit card debt on your own, an LIT will present you with all of your options, but will most likely recommend either a consumer proposal or a declaration of bankruptcy. The former is a negotiation between your trustee and the credit card company to lower the amount owed in exchange for quicker payback. The latter comes with a full discharge of your credit card debt, but does the most damage to your credit score. We look at bankruptcy as a last option, but we’ll recommend it if it makes the most sense.
Since 1996, we’ve helped people all over Ontario and Quebec clear their credit card debt. We’ve worked with all the major and independent card companies, we know how to negotiate with them and we can help you come up with a financial plan to avoid credit card debt in the future.