Best of Show: Clean Up Your Debt Mess

Posted in Debt Help
Posted by J. Douglas Hoyes, CA, CPA, LIT, CIRP, CBV

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Building A Plan To Get Out of Debt

We’re spending the summer rebroadcasting some of our best podcasts from last season — all focused on ways to get out of debt.

Every day we meet with people who aren’t just a little bit in debt — they are deep in debt. In fact the average insolvent debtor from our most recent study owed almost $57,000 in unsecured debts. You might wonder how they got that far in debt, but in truth, it’s pretty easy. Things start out small.  A little bit of credit card debt to pay for groceries or maybe even a trip somewhere. People put balances on their credit card fully expecting to be able to pay it off within a short period of time. But there is a fundamental problem they are avoiding — their budget doesn’t balance and that was why they had to turn to credit in the first place. Now they have both a shortfall in the budget (their expenses are higher than their income) and they have to make debt payments. So what happens?

They borrow more.

This is why credit card debt builds over time for most insolvent debtors. Once they’ve maxed out their credit cards they turn to even more expensive credit options like payday loans and quick cash installment loans.

credit card debt over time

On today’s rebroadcast we talk with Gail Vaz-Oxlade about how to build a repayment plan to deal with your debt before it reaches the tipping point. If, however, you find that you are looking at years and years to pay back your debt, then you may need to consider other options. We also talk with Ted Michalos, bankruptcy trustee and co-founder of Hoyes Michalos about how a consumer proposal can help you get out of debt while avoiding the need to file for bankruptcy.

Resources Mentioned in the Show

Full transcript of the original podcast with Gail and Ted available here.