Calculate Hows Soon You Can become Debt Free

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How This Debt Repayment Calculator Can Help You Become Debt Free

Ever hear of this old Irish proverb? “Forgetting a debt doesn’t mean it’s repaid.”

If you’re reading this article, it’s not likely you’ve forgotten about your debt. And depending on your circumstances, it’s also possible your creditors won’t let you. Perhaps they’ve started garnishing your wages, or collection agencies are beginning to call.

The thing is, doing nothing about your debt – either because you don’t want to face it head on or because you think you’re beyond help – has the same effect as trying to forget about it.

Inaction only makes your debt grow.

What’s more, it also limits the options you have available to you for debt relief

Here’s How This Debt Repayment Calculator Can Help

With the assistance of this calculator, you’ll see how making a decision to take action can get you closer to financial freedom.

And if you keep in mind that you may have more options to choose from the sooner you make that decision, you’ll likely pick up the phone immediately to get help.

Here’s how it works.

Step #1: Figure out how much unsecured debt you owe.

Before you can begin to tackle paying down your debt, you need to know what your total debt is.

So go ahead and add up all your unsecured debt balances.

Unsecured debt refers to regular consumer debt that is not secured by collateral. Examples include credit cards, lines of credit, and bills for services.

Enter that number into the appropriate box on the calculator.

Then, from the dropdown list right next to it, select either “Total Cost Over 5 Years” or “Monthly Payment.” The former will show you how much the repayment of your debt will cost you over 5 years, while the latter demonstrates that amount in an easy-to-comprehend monthly payment.

Hit “Calculate.”

The calculator will then bring up how much it will cost you to pay back that unsecured debt for each of four different options individuals may use to achieve debt relief.

NOTE: This calculator is for demonstration purposes only. Your specific circumstances – including your income, assets, and the type and quantity of debt you owe – will dictate both what debt relief options are available to you, as well as exact results. For an accurate assessment and personalized advice, visit a Vancouver Island Licensed Insolvency Trustee.

Step #2: Compare results for each of the different debt relief options.

This calculator allows you to see what would happen to your debt depending on which avenue you use to eliminate your debt.

The four options are:

Do Nothing, Keep Paying

This figure presumes you’re able to make your payments, which in fact may not be the case in your circumstances.

And if you can’t make your payments, your current balance will keep growing. You’ll have to add interest, defaults and penalties (if any), and likely new future debts as you let other bills fall to the wayside while you struggle to pay your current debt.

And even if you can make the monthly payments work, albeit just barely, consider the following.

What if life throws an unexpected twist your way – such as loss of a job, a reduction in hours or household income, unforeseen house or car repairs thanks to a natural disaster, or a new addition to the family.

You may not be financially prepared for such situations if you don’t have emergency savings in place. This can put you over the edge, and potentially right into bankruptcy.

Debt Consolidation

Assuming you can qualify for a debt consolidation loan, you may be able to put your debts together, negotiate down the interest with creditors, and focus on making one affordable monthly payment to repay them.

While you’ll still need to pay back 100% of your debt with this option, the monthly payment will be far more manageable for you and you will be saving on interest.

Keep in mind that this option is not legally binding on your creditors, and their participation is entirely voluntary.

Credit Counselling

This option is designed for those debtors who can afford to pay the entirety of their debt, but need relief from interest.

A qualified and licensed professional from a credit counselling agency will evaluate your financial situation and develop a payment plan that fits your budget. They’ll also negotiate with your creditors to reduce or completely eliminate interest so you can get out of debt faster.

Like debt consolidation, creditors can choose to participate or not. And those who don’t can still make collection efforts against you.

Finally, you should exercise caution when choosing a credit counselling company. You’ll want to make sure they are a registered not-for-profit, since some for-profit outfits have been known to scam hard-working, honest debtors.

Consumer Proposal

Consumer proposals are designed for those debtors who have a stable source of income and can only afford to repay a portion of what they owe, which is typically less than $250,000.

To file a consumer proposal, you’ll need the assistance of a Licensed Insolvency Trustee.

Your trustee will negotiate with your creditors to reduce your debt as much as 80%. You’ll then be responsible for making a monthly payment to repay this reduced debt.

You will only need 51% of your creditors (calculated by dollar value) voting in favour of the proposal in order for it to be accepted and legally binding on all your creditors.

Lastly, unlike the preceding debt relief options, a consumer proposal gives you legal protection from your creditors. This means that once you file, all collection efforts (including garnishments) by your creditors immediately stop. Also, all your creditors are bound by the proposal unless you default on it.

Step #3: Contact a Licensed Insolvency Trustee today.

As you can see by using this debt repayment calculator, there is more than one way to get relief from your debt, and the sooner you take action, the more options you may have available.

If you’re struggling to make ends meet, the absolute best step forward is to contact a Licensed Insolvency Trustee immediately.

Trustees are the only professionals authorized and regulated by the Canadian government’s Office of the Superintendent of Bankruptcy to help you file a consumer proposal or bankruptcy.

But our job is not just to help Canadians file insolvencies.

We want to see you realize better financial health. That means getting yourself out of any debt that’s weighing you down.

At your initial, free consultation, we’ll evaluate your financial situation and help you explore all your debt relief options. We’ll also provide you personalized advice on the best solution for you and your family.

There is a way out of your financial distress, and our qualified, credentialed, and seasoned experts will help you find it. Contact us today.