Sage advice for people mired in debt

People with financial problems a steady business for bankruptcy trustees

You know there’s a problem with people living beyond their means, when government has a website offering advice on how to deal with it.

In Nova Scotia that kind of information is found at: https:// novascotia.ca/sns/access/individuals/debtor-assistance.asp.

But if you’d prefer to deal directly with a licensed bankruptcy trustee, there are plenty of companies offering to help consumers handle debt problems in various ways. Again, in Nova Scotia, the Office of Superintendent of Bankruptcy website has a list of licensed trustees.

If experiencing financial difficulty with creditors, there are several options available to consumers, according to the government site. Selecting the best one depends on the amount of debt, if there are many highinterest loans and/or maxed out credit cards.

If one catches the problem quickly, there may be an opportunity to rework the family budget — cutting spending for things like entertainment, clothes or travel — and setting new priorities.

Joe Wilkie, a licensed insolvency trustee at MNP Ltd. in Halifax, says working within a budget and cutting out variable expenses is something he was promoted for years.

“If you don’t know where your money is going, that’s the place to start,” says Wilkie. “Start tracking your income and expenses on a month-by-month basis and then you can do some comparisons and see where your money is going.”

Many of the people he meets with often comment on the realization that the little things add up to become much larger things, Wilkie said in a recent interview.

“Some of the unexpected expenses — like the car repairs and things like that — where you have the money one month and you don’t have it the next, it puts your budget all out of kilter,” he said.

It’s important to research the companies before you commit to a plan, Nova Scotia warns. Service Nova Scotia offers debtor assistance programs, which allow concerned consumers to meet with a licensed administrator. The administrator can review the individual situation and discuss available options.

Should a registered consumer proposal be an available option, there are fees which an individual may discuss at length with one the licensed administrators — located throughout the province at various Access Nova Scotia Centres.

Other provinces offer similar debt assistance advice.

The government site suggests not making any payment before the counsellor has provided services to you.

Don’t provide personal financial and identification information without receiving a signed contract or other commitment from the counsellor, to protect your identity and privacy.

Don’t enter into a contract before a debt settlement agree- ment is agreed to by all parties involved — debtors and lenders.

Wilkie says if people are having problems with debt, while the rates are still relatively low, he recommends not putting it off and meeting with a licensed bankruptcy trustee to get advice.

“We go through the variety of options with them. We offer a couple of things; more people seem to be going towards consumer proposals in trying to settle their debt,” he says. “A lot of people want to settle their debt, they took it on and they feel they want to repay it, so consumer proposals have been on the rise over the past number of years.”

The consumer proposal is first filed with Industry Canada, and then offered to the creditors. Wilkie says creditors have 45 days to respond to the proposal, whether they’re in favour of it or not. If less than 25 per cent of the creditors vote against the proposal, then the proposal is automatically approved.

“In some situations, you call a meeting and, for the most part, a lot of the creditors deal with this by mail or fax, as opposed to coming to these meetings in person. So, you actually have a vote on the proposal. The majority rules ... once the majority decides everybody is tied into the proposal,” he says, adding the proposals go a maximum of five years.

After the proposal is completed, Wilkie says, it is carried on the individual’s credit history for an additional three years.

A recent survey conducted for MNP, suggested consumers in Atlantic Canada are the most confident in the country about their ability to absorb a hike in interest rates.

The MNP Consumer Debt Index actually suggested consumers in Atlantic Canada feel more optimistic about their debt situation than other Canadians.

“There are still many people who are dangerously close to being unable to pay their bills and wouldn’t be able to service debts in a normal rate environment,” says Wilkie.