Finding the Right Solution

Our Guide to Debt Freedom

www.hoyes.com

Table of ContentsIntro to Debt SolutionsSolution 1: Fix it YourselfSolution 2: Debt Consolidation LoanSolution 3: Debt Management PlanSolution 4: Consumer ProposalSolution 5: Personal Bankruptcy

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If you’ve determined that you have serious financial problems, it can be difficult to take that next step.

You might consider solving your debt problems yourself, or you may realize that you need professional assistance.

In either case, you first need to know the options available to you to resolve your debt issues. 3

Finding the Right Solution

With these factors in mind, you can determine which of the following solutions is right for your

situation.

Before you can choose the right solution, you must know three key pieces of

information:What You Owe

What You Own

Your Cash Flow

• Credit card debt• Bank loans• Mortgages• Lines of credit• Student loans• Car loans

• Savings• Investments• Real estate• Vehicles• Electronics• Clothing

• How much money you have left over after paying monthly expenses

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Solution 1: Fix it YourselfDo You Own More Than You Owe?Turn your assets into cash that you can use to repay your debts. For example, sell your second car and put the money towards your debts.

Do You Have Excess Cash Flow Each Month?Use this money to pay your debts. If you don’t have extra cash, make some! Increase your income by working overtime or getting a second part-time job.

Do You Have No Assets and No Income?You might find yourself unemployed or retired with a small pension. In this case, it may be best to do nothing.

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Solution 2: Debt Consolidation Loan

If you have a job, or a good sized pension, but are still finding the minimum monthly payments on your debts too much to handle, a debt consolidation loan might be the right answer.

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Solution 2: Debt Consolidation Loan

How it WorksA debt consolidation loan is a type of loan that allows you to repay many of your other debts.

In essence, you are combining your debts into one debt.

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Solution 2: Debt Consolidation Loan

What’s the Catch?• It can be extremely difficult to qualify for a debt

consolidation loan. • A debt consolidation loan does not actually

reduce your debt. • Debt consolidation loans can be very dangerous

and get you into further debt.

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Solution 3: Debt Management PlanWhat if you don’t qualify for a debt consolidation loan with a reasonable interest rate, but you still want to find a way to repay your debts?

The next best solution might be a debt management plan.

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Solution 3: Debt Management PlanHow it WorksA debt management plan is usually offered through a credit counselling service that will arrange for you to repay your debts in full, over a period of 2-5 years.

Generally, you will repay your debts at a reduced or zero interest rate. You’ll have one monthly payment until your debts are repaid.

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Solution 3: Debt Management Plan

What’s the Catch?• Watch out for “for profit” “credit counsellors”. • A debt management plan is not legally binding

for all your creditors. • You have to repay your debts in full.• Not all debts qualify (tax debts cannot be

included for example).

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Solution 4: Consumer Proposal

What do you do when you want to repay your debts, but can’t afford to pay them back in full?

A consumer proposal is one of the best kept secrets in debt management.

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Solution 4: Consumer ProposalHow it WorksA consumer proposal is similar to a debt management plan in that you will be making a monthly payment to settle your debts.

Your consumer proposal administrator will negotiate a settlement with your creditors based on the amount you can afford to pay each month.

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Solution 4: Consumer Proposal

What’s the Catch?• You must be able to make the monthly

payments. • Consumer proposals only work for unsecured

debts. • A majority of your creditors must agree to the

proposal.

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Solution 5: Personal BankruptcyWhat happens if you can’t make monthly payments, or if your creditors will not accept a consumer proposal?

It’s time to consider the last resort: personal bankruptcy.

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Solution 5: Personal BankruptcyHow it WorksBankruptcy is a legal process in which your trustee distributes your assets to your creditors and your debts are eliminated.

Once you have filed bankruptcy, your creditors cannot take you to court, sue you, or garnishee your wages. All your unsecured debts are eliminated.

At Hoyes Michalos, we believe that bankruptcy should be your last resort.

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Which Option Should I Choose?With several options for fixing your debt problems, there is often no obvious solution.

The best way to determine the right path to debt freedom is to talk to a professional debt management team like Hoyes Michalos.

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There is hope. You can be debt

free. Download our Fresh Start

eBook

Or give us a call at 310-PLAN