10 Ways to Get out of debt!
From Deborah Fowles


1) Use your Assets
If you have assets with some significant equity, such as a home or a car you may be able to use these to get control of your debt. For example, you could get a loan on your home sufficient to pay off your debts. You could be saving a considerable amount of money on interest if you pay off high interest credit card debt in return for lower cost debt. If you have a car, consider selling it, paying off your debts and buying a cheaper car. Be careful though! Your don't want a "cheaper" car that will cost you a fortune in repair costs.

2) Get a Second Job
Use the money from this job to only pay off your debts. List your debts noting the interest rates. Pay off the debts with the highest rates first and work your way down the list.

3) Put your Credit Cards on Hold
One of the best steps you can take to get out of debt is to immediately stop using credit cards. At the very least destroy all your cards keeping just one card for emergencies.

4) Set up a Repayment Plan
Cut back on your expenses and/or use freed up cash to pay down your debts Pay off the debts with the highest rates first and work your way down the list. 5) Get a Consolidation Loan
A consolidation loan can make lots of sense. Get a loan to pay off all your many debts and have just one payment to make. The new loan usually has a smaller payment and a lower interest rate.

6) Use the Services of a Credit Counsellor
There are two types of credit counsellor; independent credit counsellors and ones who advertise as "non-profit". “Non-profit” credit counsellors perform the same services as independent credit counsellors and have similar training and services. We do not distinguish between the two as they provide similar services and both charge a fee

7) Informal Proposal
In some cases you can make a proposal to your creditors to set up a payment plan that will allow you to pay your creditors in an orderly way and thus help preserve your credit rating. This operates similar to a debt consolidation loan except you do not borrow the money to pay off your creditors. You may be able to pay less than 100 cents on the dollar. For example, a relative may be willing to pay a lump sum to the creditor of say 50% of the amount owed in order for the balance of the debt to be written off.

8) Use your Province's Orderly Payment of Debts System
Residents of some provinces such as Alberta, Saskatchewan, PEI and Nova Scotia can apply for a Consolidation Order. This provision of the Bankruptcy and Insolvency Act allows you to pay off your debts, usually over a three year period, and clears you from credit harassment and wage garnishment.

9) Proposal under the Bankruptcy and Insolvency Act
Under the Bankruptcy and Insolvency Act, a trustee files a Proposal or an arrangement between you and your creditors to have you pay off only a portion of your debts, extend the time you have to pay off the debt, or provide some combination of both. To be acceptable, your creditors must be better off under a Proposal than if you go bankrupt. Proposals have a number of advantages for the debtor under a great deal of pressure from his creditors:

Stay of Proceedings; No actions can be taken by creditors such as wage garnishments. If a wage garnishments is in place it will be removed.

Proposals offer a "win-win" situation. A proposal is good for the creditors because they get more than if the person goes into bankruptcy. It is good for the debtor as he avoids bankruptcy and has his credit bureau report "cleaned" three years after the proposal is satisfied.

10) Bankruptcy
If these alternatives will not work for you, bankruptcy may be the only way for you to get a fresh start. Bankruptcy offers a quick solution to getting out of debt. First time bankrupts are eligible to get out of bankruptcy (and have all debts written off, with some exceptions) in 9 months. More and more people in Canada are going bankrupt.