Managing Debt Wisely: Seeking Professional Advice

Financial professionals can help you obtain better credit terms, explore options for dealing with existing debt, negotiate with creditors, and develop a tailored strategy for your unique financial circumstances. The following are some professionals you may want to consult, depending on your situation:

Lending Brokers

Lending brokers (typically, mortgage brokers, though there are brokers for other types of loans) can help with obtaining credit. These professionals have access to a wide range of lending products from multiple financial institutions, allowing them to help borrowers find loans with lower interest rates or better repayment terms.

For someone with multiple high-interest debts, a broker might recommend a debt consolidation loan. Mortgage brokers can also help those refinancing mortgages or accessing home equity to pay down other debts. Brokers can offer guidance in navigating these options and understanding their implications, empowering borrowers to make informed decisions that support their long-term financial health.

Financial Advisors

Financial advisors provide comprehensive financial planning, including strategies for paying down debt, building savings, and reaching long-term goals. They are especially useful if you’re balancing debt with other financial priorities, such as retirement savings or investment goals.

Financial advisors can help you understand how debt fits into your broader financial picture and create a plan that aligns with your future goals. They can suggest strategies for managing debt while still contributing to savings or investments, helping you balance current needs with future aspirations. Advisors may also suggest refinancing options or debt consolidation to lower interest rates and simplify your payments, potentially saving you money in the long run.

Credit Counsellors

Credit counseling agencies, particularly those that operate as non-profit organizations, can offer support for individuals struggling to manage their finances. Certified credit counselors can review your budget, assess your debts, and provide guidance on reducing expenses and setting up a payment plan.

A credit counselor will begin by reviewing your income, expenses, and outstanding debts to get a full picture of your financial situation. They’ll help you create a realistic budget to meet your financial goals while making your debt payments more manageable. If needed, they can set you up with a Debt Management Plan (DMP), which consolidates your debt payments into one monthly payment. They may also negotiate lower interest rates or waive fees with your creditors, making it easier to pay down the debt over time.

It’s important to ensure you’re working with a licensed credit counsellor, and to avoid credit consultants who charge high fees or recommend high-interest loans, as they may not have your best interest in mind.

Licensed Insolvency Trustees (LITs)

In Canada, Licensed Insolvency Trustees (LITs) are government-regulated professionals who can offer formal debt relief options, including consumer proposals and bankruptcy. If your debt has become unmanageable, an LIT can provide a comprehensive review of your situation and help you understand which options are feasible for you, and which ones support your goals.

One common solution is a Consumer Proposal, an arrangement in which you negotiate to pay back a portion of your debt over time with creditor approval. This legally binding process can offer a clear path to debt reduction while allowing you to avoid bankruptcy. If a consumer proposal isn’t viable, an LIT can guide you through bankruptcy. This can discharge most of your debts and give you a fresh financial start.

If you’re at the point where making monthly debt payments is impossible or if creditors are pursuing collections aggressively, speaking with an LIT may be necessary. They are the only professionals authorized to administer consumer proposals and bankruptcy in Canada, providing legally structured options for debt relief, and they are government-regulated professionals highly trained in Canadian bankruptcy law, who are subject to strict ethical guidelines to ensure they provide unbiased advice.

Charla Smith & Company is a Calgary-based Licensed Insolvency Trustee, serving the southern Alberta region. We regularly help individuals navigate their options for dealing with their debt, and we provide bankruptcy and proposal options. If you'd like a free, no-commitment consultation to review your options, contact us.

Disclaimer: This publication provides general information and should be seen as broad guidance only. The information contained herein cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon this information without obtaining specific professional advice relating to your particular circumstances. Charla Smith & Company Ltd. does not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.