You shouldn’t feel anxious every time the phone rings

Nobody plans to become overwhelmed by debt. But life happens. Speaking with a professional who understands where you’re coming from is a step in the right direction.

Once you start missing payments, creditors will start calling to see what’s going on and when they can expect the money they’re owed. If you know you’re not able to satisfy their demands, you’re going to feel anxious every time the phone rings.

Professional bill collectors will do almost anything within their legal rights (and sometimes beyond) to get you to pay. In Alberta, debt collectors may call you any time between 7:00 a.m. and 10:00 p.m. up to three times per week.

Most people simply avoid answering the phone unless they recognize the number. But this strategy isn’t a long-term solution. Debt collectors will keep calling, sending you letters, and (while the questions they can ask are limited) even contacting your friends, family, neighbours, and co-workers. They may even call you at work, which can make it difficult to operate at your best.

Nobody deserves to live in this constant state of fear and anxiety. There are legal options that will stop the collectors from calling. The following tips will help you reduce your stress level so you can feel excited again when someone calls.

Prevent the calls 

If you miss a payment, your creditors may call and will want to know the reason for the delay and when they can expect payment. The first contact will be friendly — after all, you might have simply forgotten. Second and subsequent calls will be less friendly and to the point.

As with most things in life, a proactive approach can go a long way. If you can’t make your payments, at the very least reach out to your creditors and let them know what’s going on. Creditors can take various actions to help you with your debt, including deferring or reworking payments, reducing or eliminating late fees and service charges, or — in some cases — potentially forgiving some interest.

Maintaining communication with your creditors, may prevent them from pursuing your friends, family, and employers for information. You may be offered the opportunity to settle the debt with a one-time payment or a long-term payment arrangement; though some agents may not be willing to negotiate at all. If you can’t come to a mutually agreeable solution, it may be time to consider other debt solutions.

If you feel like you’re being harassed or don’t believe the debt collector is licensed in your province, contact the Department of Consumer Affairs to obtain information about debt collection. While debt collectors are allowed to try to get the money owed to them, they must follow certain rules.

Find a Life-Changing Debt Solution

If there’s no way to manage your debt that fits with your budget, there are alternatives. A Licensed Insolvency Trustee can help evaluate your financial situation and recommend a range of possible solutions for your situation, including:

• Consumer Proposal: This federally legislated debt settlement process allows you to repay a portion of your debt via a single interest free lump sum or monthly payment over a period of up to five years. If your creditors accept your proposal (which must be made through a Licensed Insolvency Trustee), this will put a halt to all collections actions, garnishees, and court judgements against you. A Consumer Proposal is designed to fit your budget and can often reduce your debt by more than 50 percent of what you originally owed.
• Bankruptcy: If your creditors reject a Consumer Proposal or your budget will not accommodate one, Bankruptcy is another federally legislated option to help eliminate your debt. The typical process involves surrendering certain assets and potentially some of your income to the Licensed Insolvency Trustee to help repay your outstanding debts debt. Like a Consumer Proposal, an active Bankruptcy will halt collections action, garnishees, and court judgements against you.
• Credit counseling: Non-profit credit counselors may be able to negotiate with creditors and collections agents on your behalf to reduce the amount of debt you owe, the interest rates, or both. This may be a good option if you do not qualify for, or would prefer not to file, a Bankruptcy or Consumer Proposal. However, it’s important to note these arrangements are not legally binding and will not necessarily put a stop to collections calls and other legal action.
• Consolidation: Debt consolidation involves taking out a loan from a bank or private lender to repay your outstanding debts. This may be a good option if you have numerous high interest rate debts like credit cards, and your credit is favourable enough to both be approved for a loan and an interest rate lower than you’re currently paying. It is important to consider the repayment plan and if the loan payment is manageable in your budget.

The biggest benefits to filing a Bankruptcy or Consumer Proposal are that they’re legally binding, they put an immediate stay of proceedings on all collections action, and the Licensed Insolvency Trustee manages all communications with your creditors. This frees you from the anxiety you feel every time the phone rings, ensures you’ll get a financial fresh start, and allows you to get back to living your life. Both processes include education in money management and how to rebuild your credit score to help you avoid running into the same issues in the future.

Be the one to make the call

Don’t wait for your creditors to call you. If you’re feeling overwhelmed by debt, contact MNP for a Free Confidential Consultation today. Together, we’ll address whatever financial challenges you’re facing and move you toward a better financial future.