A column by Margaret H. Johnson. As featured on MyTelus.com and Shaw: Finance.
Margaret H. Johnson ACE, RQIC, has over 35 years of financial industry experience in both lending and collecting. She is an Accredited Insolvency Counsellor, Registered by Industry Canada.
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Lost your job – Now what? If you or your spouse lost your jobs how would you live? Do you know? Do you have a savings plan or like most people are you living paycheque to paycheque? Who would you pay first – or would you even pay your creditors – what about rewriting your loans is this a good idea – are you sure?Here is some advice for dealing with your debts until you can get back to work or increase your income. IMPORTANT DebtsSome debts are more important than others to pay right away, for a number of reasons Mortgage – speak to your mortgage holder if you cannot make this paymentRent – you must have a place to live – you can only pack up and go home so many times before the family gets upset. Phone/Hydro – you need heat and light – it is a myth that you cannot be cut off in the winter – if you don’t pay your bill the power company will cut you off.Food – you have to eat and eating good nutritious food is usually lower in cost than the pre-made or pre-packaged goods. Try to eat lots of fresh fruit and vegetables. Child Support – this money is for your children not your ex – and in many provinces if you don’t pay it you can go to jail.Auto Payments – most of us need our cars to get to work and back – so make the payments or discuss it with the lender Vehicle Insurance – be sure to pay the insurance if your car is on the road – or have storage insurance on it- if the car is not on the road just in case it is damaged or stolen.Debts that are not as important – but should still be paid when you can Credit Cards – let the cardholder know that you are experiencing financial difficulty and that you are not able to pay this month. Do not promise to make a payment unless you are sure you can make it.Overdrafts – try to stay out of the overdraft - it costs you money to use. Finance Companies – Again let the finance company know that you are not able to pay – do not agree to make a payment that you know you can not make – this could prove to be a problem for you down the road.Be careful with finance companies – when you take out a loan many of these companies will get you to list in detail your assets i.e. TV, VCR, brown couch etc – then they will assign those assets as security for their loan - sometimes without you clearly understanding this is what they are doing. Ask questions. Also, on finance company loans they will “sell” you insurance which at the time seems like a good deal – but the amount you will pay for the coverage is huge over the term of the loan (it is my experience as a credit counsellor that this insurance covers very little that ever goes wrong for people) – so if you are unable to make your loan payments – you may want to consider cancelling the insurance and getting a refund paid into the loan.Finance companies make large profits from selling these “insurance” packages – again read and fully understand before you sign on the dotted line. Rewriting your loanConsider very carefully any offer to rewrite your loan – Ask yourself before you agree to rewrite a loan with any lender why does this lender want to rewrite? Carefully consider the reasons the lender has offered to rewrite – the usual reason given from a lender offering to rewrite is to bring the account current or perhaps to lend a bit more money – but usually the real reason of a loan rewrite is to get more security for their loan – So, if the lender did not have all your household goods and possibly your car secured for the last loan you can be sure they will secure them this time. Debt HelpIf you are have financial problems speak to a Qualified licensed credit counsellor – there is help for you - I recommend that you find out what your rights are before you deal with your creditors – then when you do deal with your creditors you will deal from a position of knowledge and knowledge means power. Do not ignore your creditors they lent you money in good faith and have a right to expect to be repaid – however, if you can not repay the creditors as agreed you owe it to them to speak to a professional today. If you are experiencing financial problems visit us today online at Solutions we can help. Remember, if you are experiencing financial difficulties do not wait. Speak to a professional today. Do you have a story that you would like to share about your experience with a debt collector? Email me – This e-mail address is being protected from spam bots, you need JavaScript enabled to view itMargaret H. Johnson ACE. RQIC is president of Solutions Credit Counselling Service Inc. and Women and Money Inc. She can be reached by e-mail at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it Or call toll-free in Canada – 1-877-588-9491 Phone: (604) 588-9491 Fax: (604) 588-9007 © Solutions Credit Counselling Service Inc. |
