Debt Management Options (Special Guest: Amma Seaforth)
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Debt Management Options - Money Problems Radio Show |
| Originally aired on October 21, 2006. | |
Show Topic:
On today's program we talked about the importance of putting together your plan to handle and effectively manage your debts. We addressed and analyzed what debt management options are available in general, and what debt management solution may work best for you depending on your individual circumstances.
Guests:
Ted Michalos joined us from the firm of Hoyes Michalos Trustees in Bankruptcy. Ted and his partner Doug Hoyes founded their firm in 1999 and have helped thousands of Canadians deal with their financial problems and get a "fresh start". Our special guest was Amma Seaforth from In-Charge Debt Solutions, a non-profit, charitable credit counselling agency offering confidential and professional advice on money problems.
Show Summary:
At the beginning of the show, Ted talked about the value of having a plan. You have to have a strategy to help you get to where you want to be.
There are a lot of options available. The first thing Hoyes Michalos does is look at the family budget: money coming in and money going out; then they assess your options for dealing with the debt. The best debt management solution in your situation could be for example refinancing; or maybe Consumer Credit Counselling; or some other alternative - depending on your circumstances.
Amma profiled In-Charge's tactics: They identify root causes of the problem, look at budgeting and provide solutions, including a DMP or Debt Management Plan.
Ted talked about consumer proposals - one of the best-kept secrets in debt management planning. Proposals are a legal process that has to be administrated by a trustee in bankruptcy. They are a deal made between the debtor and creditors where you offer to repay a portion of the debt. Ted talked about the difference between secured and unsecured debt and spoke about your obligations regarding responsibilities like tax debts and child or spousal support. Amma spoke in detail about the DMP - starting with a detailed counselling and budget analysis. In-Charge contacts your creditors to negotiate lower payments, reduced interest charges and stops creditor calls. The client makes a lump-sum payment to In-Charge monthly and they in turn disburse the money to the creditors. The DMP is designed to retire your total debts. In-Charge doesn't charge fees but asks for a voluntary monthly payment and one time set-up fee.
The cost of a consumer proposal, Ted advised, is melded into the overall proposal offered to the creditors. Ted stressed that the key to making these plans work is to include all of your debts, better to work with the complete debt picture than leave things out like personal or family loans. He also cautioned on joint debtors. If, for example, you and your spouse have both names on a credit card, both parties are deemed responsible for payment of the debt. For that reason many proposals are done as family plans. In addition, Debt Management Plans deal only with unsecured debts, Amma said, and it is important to remember that DMPs mean that you will repay all your debts over time - while consumer proposals provide for a portion of debt repayment; they will also stop wage garnishment - although getting future credit could be difficult.
In the conclusion of today's discussion, Ted stressed once again the importance of having a workable plan in order to be able to deal with your financial troubles and get the relief you need.
Don't let your money problems overwhelm you, contact a licensed trustee in bankruptcy or a credit counsellor for more information on debt management options available to you, in your specific case.