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Dealing with Creditors

Creditors represent any company that a debtor owes money to. Remember that creditors have a right to expect to be repaid. Dealing directly with creditors can be challenging, which is why it is beneficial to get advice from a professional. Contact a Licensed Insolvency Trustee to help guide you through this process.

If you can’t make payments or are experiencing financial difficulty, it is in your best interest to meet with a Licensed Insolvency Trustee, understand your options and determine a solution for your debt problems. Harris & Partners offers free consultations so it doesn’t cost you anything to obtain good advice.

Creditors are required by law to stop collection actions once you file a consumer proposal or bankruptcy. If you are having trouble paying your creditors, you need to assess the following:

  • Think about your budget and whether it allows you to make payments in the ordinary course
  • If you need more time, make sure you communicate this to someone in a position of authority
  • If you are overwhelmed, seek the guidance of a professional

When contacting your creditors, you can try to:

  • Have your payments spread out over a longer period, thereby reducing your minimum monthly payment
  • Negotiate a reduced rate of interest, which should also reduce the amount you have to pay (some credit card issuers offer cards at a reduced rate of interest – ask about them)
  • Obtain a deferral for some payments
  • Have your total debt reduced

If such a proposal is agreed upon, be sure to obtain a written notification of your agreement that indicates the terms (i.e. that you have no outstanding debt due and that your debt is now cleared with this creditor).

Communicating with Creditors

It is important that you know all of your options before communicating with your creditors. You can learn your options by meeting for an initial consultation with a Licensed Insolvency Trustee. At Harris & Partners Inc., our initial consultations are always free. If you are going to communicate with your creditors, remember these helpful tips.

Before calling, determine what you are going to ask for:

  • Reduced loan balance
  • Reduced interest rate
  • Increased amount of time to pay
  • Settlement by a lump sum

Talk to someone in a position of authority (i.e. a bank manager). Make sure you take down the name and contact information for the person you talk to in case you need to refer to the phone call or call the person again. Fully explain your financial situation to the creditor and be forthcoming with evidence if necessary.

Follow these steps for the call with your creditor:

  • Make sure you have a budget and refer to if necessary
  • Make a clear proposal – follow up in writing if necessary
  • Be polite – the individual on the other end of the phone is just doing their job, and they may help if you are honest and upfront about your current financial situation
  • Make sure you have a written agreement before making any payments

How Do You Stop Collection Calls?

A collection agency is allowed to call you about your debts and they will not tell you what your rights are. Generally, they have to call during reasonable hours (7 AM to 9 PM). It is up to you to know your rights. Here are some important things they are not allowed to do:

  • Collect a debt without first notifying you in writing and taking reasonable actions to do so
  • Taking legal action without first trying to collect from you
  • Calling outside of reasonable hours and bullying, threatening or harassing you or your family members
  • Providing false or misleading information
  • Not identifying themselves or giving details on the debt
  • Contacting friends, relatives, etc. that have nothing to do with the debt, although they are allowed to ask for your contact information

To stop collection calls, you must deal with the debt or settle with the collection agency. But if you are experiencing financial difficulty, it is in your best interest to meet with a Licensed Insolvency Trustee and understand your options and whether there is a solution for your debt problems. Collection agencies are required by law to stop collection calls once you file a consumer proposal or bankruptcy.

Budgeting Tips

These are the top 10 tips for budgeting.

The first step is to set your financial goals. You may be looking to save, pay off debt or purchase a new car. These are all valid goals.

Use technology – there are lots of great budgeting tools out there.

Give yourself an allowance and stick to it. Reward yourself for meeting budget over a period of time.

Be realistic – you are going to purchase things at some point that are not a necessity. Don’t beat yourself up, just recognize where opportunities exist.

Open a bank account specifically for savings.

Look for luxuries hidden as necessities. Two coffees a day at the doughnut or coffee shop add up to $1,000-$2,000 of extra spending per year and $10,000 over 10 years. Drinking the coffee in the office or brewing your own may result in significant savings.

Track your spending and bank account for a period of time to see your spending patterns.

Do not rely on windfalls, such as bonuses, as part of your budget. Make these windfalls automatic savings.

Contribute RRSP’s. They become exempt from your creditors so long as one year passes from the contribution date.

Save for a rainy day. You can do this by aiming to spend no more than 90% of your income. Use the other 10% or more for savings.

If you have run into financial problems, let Harris & Partners help you get your debt under control and move forward with your life with financial stability. Work with our trustees in Toronto, Ontario today. Free initial consultations are available.

Contact Us

Do you have any questions that you would like to discuss with our professional trustees? Fill out this form with as much information about your situation as possible. Or you can call Harris & Partners at 1-800-268-8093.

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It is never too late to obtain debt help. Contact the Licensed Insolvency Trustees at Harris & Partners Inc. in Toronto or one of our other 10 locations across Ontario. Call today for your free consultation: 905-479-5712.

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