How to get rid of debts and improve your budgeting skills, according to an expert
Some months ago, a distraught woman sat in front of Brian Doyle, the cofounder of Doyle Salewski Inc., Licensed Insolvency Trustee, admitting to her husband she had gambled away their house. Today, with the help of Doyle’s financial consulting and restructuring services, the couple is rebuilding and the woman is still expressing her gratitude. Doyle says it’s just one example of how the company’s customized solutions can help those with unmanageable amounts of debt.
“She was still making me date squares six months later,” said Doyle of the appreciative client. “The most common remarks by people who are in the process of recovery are, ‘I wish I had come to you earlier’ and, ‘I didn’t realize it was this easy.’”
While no one plans to struggle with debt, it can happen to virtually anyone. All it takes is a luxury expense, maxed out credit card or an unforeseen life event to derail payments or cause more debt, creating a vicious cycle. One of the biggest culprits? Low interest rates, says Doyle.
“People are prompted to buy now and pay later, and to take on a lot of debt thinking that low weekly payments are affordable,” he said. “They don’t take into account that this accumulates, and they find themselves without the sufficient funds to meet monthly expenses that include debt repayment.”
Beyond the culture of spend and borrow, people are also not adequately prepared for certain stages of life. For example, Doyle says he is increasingly seeing post-secondary graduates who took on excessive amounts of credit in a short period of time to fund a particular lifestyle, or couples unprepared for the cost of having and raising children. Meanwhile, others fall into what Doyle calls the “black swan” category — an unexpected event that would be extremely difficult to predict, like a divorce, bailing loved ones out of hardship or an illness.
“Being in debt and carrying debt and balances on credit cards is the new normal when it shouldn’t be,” he said. “People should be adverse to bad debt. Good debt is buying a reasonable house. Bad debt is buying a luxury car. Look at everything you are buying and ask yourself if it’s a want or a need.”
There are common signs that someone is beginning to struggle with debt. Making just minimum payments, being unable to make minimum payments or skipping payments are among them. Doyle says these typically come before the next stage: collection calls.
“I’m not just talking about credit card payments, here,” he explained. “Some people do a lottery system where they prioritize which bills they will pay this month and which bills will wait until next month. When next month comes, they fall behind on a different bill and the cycle continues until things go to collections.”
Once someone realizes they are financially stressed, they should turn to professionals such as Doyle Salewski. The company provides an initial free consultation during which a counsellor reviews assets and debts to suggest the best options. Doyle says people are often surprised to learn there is more than one debt-eliminating option.
“Through consumer proposals, we’ve managed to cut some clients’ outstanding debt by 90 per cent,” he says. “Creditors settle on this figure based on our analysis that it’s in their best interest to take the offer in comparison to bankruptcy and taking into account the client’s circumstances, income, expenses, family situations and ability to pay.”
Doyle Salewski, which has relationships with creditors and the CRA, has also been able to get remarkable compassion-based settlements for its clients, such as in cases of illness. It’s another solution of which people aren’t aware, he says, as the relationship between debtors and creditors is often acrimonious.
“This one man took care of his wife who had MS and then worked nights and had to have someone else take care of her,” Doyle remembers. “With the added but necessary expense, he fell behind. His creditors had compassion. People go from having no hope to realizing they can be free of the burden of debt.”
Once a solution is determined, and if it is necessary to proceed with a formal process, Doyle Salewski clients receive two counselling sessions and go through a program of making monthly payments and reporting their income for a specified amount of time. The process, however, doesn’t end when repayment does, because Doyle Salewski also refers clients to various organizations that specialize in financial education through classes and workshops, hoping to help them avoid struggling with debt again.
“We want to see our clients get over the stress and guilt so they can prosper,” Doyle said.
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The most common remarks by people who are in the process of recovery are, ‘I wish I had come to you earlier’ and, ‘I didn’t realize it was this easy.’