Dealing with the financial impact of a serious debt load is unpleasant for many reasons. If you’re struggling with large amounts of debt, you may be nearing or exceeding your credit facilities’ borrowing limits, failing to make your minimum monthly payments, and using your credit cards to pay off other debts.
You may have noticed a substantial decline in your credit score as a result of this risky behavior. Poor credit can seriously affect your ability to do many of the things that folks with sterling financial reputations take for granted. For instance, you may have trouble opening even a modest new line of credit or securing an auto or home loan through a traditional lender.
Without easy access to credit, you’ll no longer be able to enjoy the comfortable lifestyle that you take for granted. Even if your income is sufficient to cover most of your recurring household expenses, you’ll have less cash left over after accounting for these obligations to spend on stylish clothing, accessories and entertainment.
However, chances are good you must put a substantial portion of your monthly income towards servicing your existing debts. At the same time, you may be forced by simple necessity to initiate new credit card charges for durable goods, textbooks, vehicle maintenance jobs and other essential items. Combined with the interest on your existing obligations, these new charges may make it difficult or impossible to manage your debts effectively.
While every Canadian creditor is different, few lenders permit their customers to run past-due balances on an indefinite basis. If you’ve been struggling to keep up with the monthly payments on your debts for some time, you’ve probably received some form of correspondence from a third-party debt collection agency demanding swift repayment.
With thousands of debt collectors working both in-house at finance companies and through independent agencies, the debt collection industry is highly fragmented. However, the activities of all licensed Canadian debt collectors are circumscribed by national and provincial law. As such, the behavior of most of these individuals or outfits follows a predictable pattern.
If you fail to pay off a given debt in a timely fashion, you may be contacted by multiple debt collectors regarding its discharge. First, you’ll nearly always hear from an in-house lender representative. They’ll remind you of the exact size of your debt, the length of time that it has been in arrears, and your obligation to discharge it as per the binding agreement between you and your lender.
At first, they’ll ask for a full lump-sum repayment and threaten legal action in lieu of its receipt. Though you may be tempted to accede to their demands and wash your hands of a portion of your debt load for good, you probably won’t be in a position to pay off the entire obligation with interest in one go. If you had access to the kind of cash hoard that such an endeavor would require, you wouldn’t need to max out your credit cards to afford basic household necessities.
Don’t let yourself be victimized by a well-capitalized financial institution. In response to demands for immediate repayment, keep calm and explain to your debt collection representative that your finances are stretched to the breaking point at the moment. Ask them to consider accepting repayment in equal installments over a period of months or years. Since your lender would prefer not to see you go belly-up and become unable to repay, they may be willing to negotiate on the terms of your contract.
If you’re unable or unwilling to repay your creditor after the initial in-house attempt at debt collection, you’re likely to be contacted by a harsher third-party debt collector. While your primary lender is technically required by law to notify you before passing your information along to a debt collection agency, this often doesn’t happen. Without warning, you may simply receive a threatening phone call from an angry-sounding debt collector one day.
Third-party agents tend to be less willing to negotiate than primary lenders. For this reason, the Financial Consumer Agency of Canada recommends that you attempt to negotiate directly with your creditors even after receiving a collection-agency call.
Unfortunately, this often isn’t possible: Once your creditor sells your severely past-due debt to an aggressive debt collection agency, they lack the authority to negotiate a settlement on it. If you must deal directly with one of these private outfits, be sure to keep detailed records of your conversations and correspondences. Write everything down and check their stories for errors or inconsistencies.
Since debt collectors can be a rough bunch, Canadian law prevents them from engaging in certain unseemly acts. They generally may not contact your extended family members or neighbors for personal or background information and cannot ask you to borrow money from a non-traditional source to repay your debt. What’s more, they’re barred from calling you during non-business weekday hours. While they often come off as pushy and exasperated, they are also expressly forbidden from using profane or abusive language with their clients.
If you’re sick of putting up with harassment from these third-party debt collectors, you may be able to do something about it. As long as you have debts in excess of $10,000, you may qualify for a debt settlement workout. Once completed, this program will put a sudden end to most collection-agency calls.
Like bankruptcy, debt settlement enables you to discharge your debts for a fraction of their original face value. It’s also faster, more cost-effective, and doesn’t devastate your credit score for years after being finalized. The process is simple: Debt settlement professionals negotiate directly with each of your lenders to reduce the total principal amount that you owe on your loans.
In addition to stopping most debt collectors in their tracks, debt settlement may save its users thousands of dollars in principal and interest payments. In the past, Canadian debt settlement customers have used this proven debt relief method to reduce their outstanding obligations by up to 60 percent. Most unsecured debts are fair game for the process, broadening its appeal across a wide swathe of Canadian society.
If you’re sick of dealing with debt collection agencies and wish to make a meaningful dent in your outstanding debt load, contact Maple Leaf Debt Helpers today to learn more about the debt settlement process.
