If you read Part 1 of my blog, How I got into so much Debt, you’ll recall I’m a university graduate and working professional that is neck high in debt. Wonder how I got into this mess? It all started with a credit card as a freshman in university.
I left my last blog post with the question, “How am I going to pay this debt off?”
My options were:
- Bankruptcy
- Formal proposal
- Continue paying the minimum payments forever
- Debt relief through negotiation with my creditors to come up with a repayment plan
So let’s start with Option 1: Bankruptcy
I contacted a bankruptcy trustee and she went over all of my debts and analyzed my spending habits. After I received a lecture on proper spending (which I probably needed), I was told I would need to submit all of my debts to the bankruptcy repayment program. The debts would be consolidated and I would be required to pay back all of my debt. No deals or negotiation here. Also, I would not have access to credit for up to 7 years. There was also a fee to declare bankruptcy and my credit rating would reflect a bankruptcy. I wanted to withhold one credit card debt to use in case of emergency, but that was not permitted. Bankruptcy was not a flexible means of debt repayment for me, so I turned to my next option.
Option 2: Formal Proposal
Formal Proposals are similar to bankruptcy as you have to include all debts on the repayment program. I was not able to prioritize any of my debts and I had to pay them all in full. If I defaulted on a payment once I began this program, the proposal would terminate and I would be right back to where I started.
Option 3: Continue to pay the minimum payments on my bills forever
I considered this for about a minute, and quickly gave my head a shake. One of my credit card bills showed how long it would take me to pay off my debt if I only pay the minimum payment. My debt was just over $3000 and it would take me 25 years! Combined with my other credit card bills I would be about 150 years old by the time my debt was repaid. Most of the repayment would be interest on top of that. No – that’s not a viable option for me.
Option 4: Consult a Debt Relief Professional
I did some research on a number of debt relief firms and found one in particular that worked best for me. They gave me a free and thorough financial assessment and outlined the options I had to resolve my debt. They even gave me a great budget planner to help me manage my expenses. What really attracted me to their program was the flexibility it offered. I did not have to include all of my debts in the program. If I wanted to withhold one credit card to use while on the program, I could. Now I am an honest person and therefore wanted to pay all of my creditors back the debt I owed in full, but I just couldn’t afford it. I needed to make sure I’d have enough money in my pocket to pay my mortgage and feed my family. That was the top priority of the debt relief firm representing me too. I felt secure knowing they were on the same page as me. I became a member and they started negotiating with my creditors immediately. The firm helped me prioritize my most critical creditors first. Soon the collection agencies that were calling me were no longer calling anymore. Relief! Within 3 months my creditors were agreeing to the repayment amounts I authorized my debt relief firm to offer. It felt fantastic to start checking debts off my list, and I started to breathe easier.
Not only that, if I ever needed to renegotiate my repayment program due to a job loss or any other additional strain on my finances, I had the opportunity to renegotiate. My program did not terminate, it just evolved. I understood that my credit score was affected by my debt, but at least I was cleaning up my finances. That was my priority – becoming debt free.
With the tools my debt relief firm gave me I am more equipped to manage my finances responsibly. If I need debt relief services in the future, I know I’m a member for life. That’s comforting to know they’ll always have my back.
That’s my story in a nutshell about how I got into debt, and how I am getting out. In a few months I’ll have had paid off my last creditor. With the money I have saved in paying interest on my prior debts, I have saved enough to afford a better car for my family!
If you are unsure about how to resolve your debt, do what I did. Research all of your options. If you choose to resolve your debts through a debt relief firm, find one that fits your lifestyle and your financial needs. If they have your best interests in mind, your repayment plan will not exceed what you can afford. It’s that simple.
For more information about the debt relief firm I used, visit www.occa.ca or call them for a free financial assessment at 1-866-873-6222. They will help!
Thanks for reading my blog! I’d love to hear your comments – do you have some tips to share?
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